Preamble

The House—after the Adjournment on 25th March, 1948, for the Easter Recess—met at Half-past Two o'Clock.

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

SHOREHAM HARBOUR BILL

As amended, considered; to be read the Third time.

UNIVERSITY OF SHEFFIELD (LANDS) BILL (By Order)

Consideration, as amended, deferred till Wednesday, 14th April.

Oral Answers to Questions — MINISTRY OF PENSIONS

Hospitals (Administration)

Mr. George Thomas: asked the Minister of Pensions to state the changes proposed in the administration of Ministry of Pensions hospitals after 5th July next.

The Minister of Pensions (Mr. Buchanan): As Ministry of Pensions hospitals are not transferable under section 6 of the National Health Service Act, no change in administration is contemplated.

Wear and Tear Allowances

Mr. J. L. Williams: asked the Minister of Pensions whether he is now in a position to make an announcement regarding the improvement in the allowances paid by his Department for the wear and tear of clothing.

Mr. Symonds: asked the Minister of Pensions if he is yet in a position to announce an increase in the wear and tear allowance for disabled ex-Service men.

Mr. Buchanan: I am glad to say that the present allowances of £3 and £5 a year are being raised to £5 and £8 a year respectively with effect from 1st February, 1948. Application for the increase will not be necessary, but it may be some little time before the work of adjusting the considerable number of current grants is completed.

Oral Answers to Questions — BRITISH ARMY

Donyatt Estate (Compensation Claim)

Mr. Collins: asked the Secretary of State for War if he is aware that the Somerset County Council has negotiated with his Department since December, 1946, in respect of compensation payable for removal of defence works on the Donyatt Estate; that no settlement has been reached and meanwhile valuable agricultural land worth up to £6 per acre annual rental, cannot be used for food production; and if he will make a statement.

The Under-Secretary of State for War (Mr. Michael Stewart): I regret that there has been delay in a local office in dealing


with the county council's claim, but the council are now being informed of the amount of compensation which can be offered them.

Mr. Collins: Is my hon. Friend aware that there has been a very long delay in this matter, and can he give an assurance that steps will be taken to avoid a similar delay in future, so that agricultural land is not held and wasted in this way?

Mr. Stewart: Yes, Sir. I am aware that there has been delay, and it is being further investigated.

Ex-Indian Army Officers, Burma, (Charges)

Sir Waldron Smithers: asked the Secretary of State for War if he is aware that two officers holding His Majesty's commission, Major C. H. H. Young and Captain Vivian, are respectively on bail and in gaol in Burma; and what steps he will take to protect their interests.

Mr. M. Stewart: Both these ex-Indian Army officers are alleged to have committed very serious civil offences. One has been sentenced to two years' imprisonment, but is appealing against this sentence. The trial of the other officer is not yet complete. The British Military Mission are watching their interests.

Sir W. Smithers: Is the Minister aware that there is a great question of principle and of the prestige of Britain involved here? Is he aware that these two officers, and, incidentally, U Saw, who is to be hanged on 9th April, were convicted under British rule, and at that time had a right of appeal to the Privy Council, and that that right has now been taken away? Will he do what he can to see that British justice is vindicated?

Mr. Stewart: The Government of Burma have the power to hold these officers and try them, but the British Military Mission are keeping us closely informed of all developments.

Sir W. Smithers: Will the Minister give them a right of appeal?

A.T.S. (Extended Service Application)

Mr. Hector Hughes: asked the Secretary of State for War if he is aware that an Aberdeen subaltern in the A.T.S. with

a good and long record, particulars of which have been sent to him, who applied for extended service in the A.T.S. was obliged to resign her position as an established civil servant in the Post Office before her application for such extension would be considered; that her application was then refused and she thereby lost both such extended service and her Civil Service post through no fault of hers; and if he will investigate this case and restore her to the A.T.S.

Mr. M. Stewart: I regret that I have not completed my investigation of this case, the circumstances of which present some complications. I hope to be able to write to my hon. and learned Friend shortly.

Mr. Hughes: Will my hon. Friend give an assurance that, if this woman applies to make the Army her career, she will not be penalised?

Mr. Stewart: I cannot, until the investigations are complete, give a positive assurance on that point. This woman is still serving with the A.T.S. at present.

War Graves Commission (Charter)

Sir Ian Fraser: asked the Secretary of State for War if he will advise the War Graves Commission, when it applies for a new charter for the second world war, to include in the new charter powers to enable it to look after the graves of all ex-Service men and women of all future wars or warlike operations or who die on active service at any time in the future.

Mr. M. Stewart: My right hon. Friend is not at present prepared to invite the Imperial War Graves Commission to apply for an indefinite extension of its purposes and powers as suggested. Provision is contained in the present charters, which cover the recent war, enabling the Commission by agreement to meet the wishes of any Government of the Empire concerning any place of burial or memorial not already within the Commission's powers. A similar provision would, no doubt, be included in any new charter which may be required as occasion arises.

Sir I. Fraser: Will the hon. Gentleman represent to the Secretary of State the feeling that ex-Service men or women, whenever or wherever killed, are entitled to the same honourable burial and care of


their graves as those who died in the two great wars?

Mr. Stewart: Yes, Sir, but honourable burial and proper care of the graves are ensured whether they come within the purview of the War Graves Commission or not.

R.A.S.C. Clerks, Middle East (Release Deferment)

Mr. Driberg: asked the Secretary of State for War how many R.A.S.C. clerks in groups 68, 69, and subsequent groups, serving in M.E.L.F., are to be affected by the impending deferment of their release; by what authority the Commander-in-Chief, Middle East, has extended the principle of deferring the release of individual key men, whose services are operationally vital, to cover whole groups numbering many hundreds each; and what steps were taken to make such group deferments unnecessary by training extra clerks in good time.

Mr. Symonds: asked the Secretary of State for War how many R.A.S.C. clerks in groups 70, 71 and 72, serving in East Africa Command, are to have their release deferred two months or more; and on what authority deferments are made of whole groups at a time without individual consideration of each case.

Mr. M. Stewart: As my right hon. Friend said in reply to a Question by my hon. Friend the Member for Maldon (Mr. Driberg) on 23rd March, it is not possible to forecast how many R.A.S.C. clerks in group 68 and later groups serving in the Middle East, including East Africa Command, may have to be deferred. It is not the case that whole groups are being deferred. Cases are dealt with individually, a minimum working strength being assessed for each unit. It was not possible to avoid the necessity for deferments by training extra clerks because the present difficulties have arisen partly owing to acceleration of the release programme generally, and partly owing to the situation in Palestine.

Mr. Driberg: Is my hon. Friend aware that it is simply not true that each case is dealt with individually? Is he further aware that whole groups are being deferred, not in the sense of age-plus-service groups, but in the sense of groups numbering several hundreds of clerks?

Mr. Stewart: I think that what my hon. Friend has in mind is that all R.A.S.C. clerks in group 67 in this theatre were warned that they were liable for deferment, but of those about 25 per cent. have already been sent back to this country. The procedure of individual deferment and the opportunity for appeal are being maintained in every case.

Mr. Swingler: How many have actually been deferred up to the present time?

Mr. Stewart: In group 67, approximately 300 have already been deferred.

Imber Village

Mr. Lipson: asked the Secretary of State for War if he is aware of the concern at the decision of his Department not to release the village of Imber for civilian use; and if he will reconsider the matter.

Mr. M. Stewart: My right hon. Friend is fully aware of the concern aroused by this decision, but in the absence of any new factor falling within the terms of the White Paper on Service Land Requirements, he regrets that he can see no case for further inquiry.

Mr. Lipson: In view of the fact that a certain number of the inhabitants have stated that five years ago a verbal assurance was given by a representative of the War Office that the village would be restored, will the hon. Gentleman order a judicial inquiry into that point at issue between the inhabitants and the War Office?

Mr. Stewart: No, Sir. We are fully satisfied that that undertaking was not given. The nature of the undertaking was that if ever the village were to be inhabited again, the previous inhabitants would have the right to go there. Indeed, a promise such as is described could not have been given, because the inhabitants of the village were War Department tenants and there was always a clause in their tenancy which allowed the War Office to resume possession of the houses.

Colonel Dower: Apart from the promise, about which the hon. Gentleman does not appear to be certain, has he satisfied himself that this is a suitable area for street fighting? It is not substantially built up? Is the hon. Gentleman aware that the information I have received is that there are more suitable areas which could be acquired?

Mr. Stewart: I would like to repeat that I am quite certain of the facts about the promise. In choosing an area for training of this kind we cannot select what, for purely military reasons, would be perhaps the ideal area. If the hon. and gallant Gentleman can recommend to us an area, say in his own constituency, we should be pleased to look into it.

Mr. Grimston: In view of the very general feeling that some sort of undertaking was given, will the hon. Gentleman go further into this question, as he has denied that any undertaking was given?

Mr. Stewart: My right hon. Friend and I have already been into this question in very great detail. No doubt it will be necessary to go still further into it, but I do not think that any inquiry would reveal anything different from what I have already stated to the House with regard to this alleged promise.

General Sir George Jeffreys: Will the hon. Gentleman say what is considered to be the advantage which will result to the Army from retaining this village and using it for training? Is it not a fact that equally good results could be obtained in many other places which are not inhabited at all?

Mr. Stewart: It is necessary to have training of this kind. The number of places where there are the necessary facilities and where people are not in occupation must be extremely limited. I would point out that not only is this village uninhabited now, but it would not be a reasonable proposition, on merely economic grounds, to make it habitable again.

Mr. Lipson: Is not the hon. Gentleman aware that the public would have much more confidence in the decision of a judicial inquiry on the point at issue rather than in a one-sided statement from the War Office?

Colonel Gomme-Duncan: Can we accept it that this is now a matter of "Forever Imber"?

Military Administration, Ogaden Area

Mr. House: asked the Secretary of State for War if he is aware that the representatives of the Sinclair Company, engaged in oil extraction in the Ogaden

have been attacked by armed bands; that, in consequence, oil extraction has been suspended and the company's representatives have been obliged to retire for safety to Dire Dawa; and why the British Military Administration, which is responsible for maintaining order in the area, under the Anglo-Ethiopian Agreement, 1942, has refused to protect the employees and installations of the company.

Mr. M. Stewart: I have just received a full report on this matter from the overseas military authorities. When this has been studied I will write to my hon. Friend.

PRISONERS OF WAR (REPATRIATION)

Mr. Peter Thorneycroft: asked the Secretary of State for War what is the number of German prisoners of war now in Egypt; what is the rate at which these men are being returned to Germany; and the date by which it is expected that that repatriation will be completed.

Mr. M. Stewart: There are at present approximately 46,000 prisoners of war in the Middle East, of whom the majority are in Egypt. Prisoners of war from the Middle East are being repatriated at an average rate of about 5,000 a month. Their repatriation is expected to be completed in October.

Mr. Thorneycroft: Are any women prisoners included in that number?

Mr. Stewart: I could not say without notice.

Mr. Skeffington-Lodge: Are any of these prisoners being given the chance to come to this country to assist in agriculture, or in any other connection?

Mr. Stewart: That is not the Question on the Paper.

Oral Answers to Questions — EMPLOYMENT

Coal Industry (Manpower)

Mr. Swingler: asked the Minister of Labour the average net monthly increase of manpower in the coal industry during the calendar year 1947 and the figures for January and February, 1948.

The Minister of Labour (Mr. Isaacs): In each monthly period of four weeks during 1947, there was an average net increase of 2,000 in the number of wage earners on colliery books. The corresponding figures for the four week periods ending 31st January and 28th February, 1948, are 2,500 and 2,000.

Wells House Hydro, Ilkley

Colonel Stoddart-Scott: asked the Minister of Labour if he is aware that Wells House Hydro, Ilkley, is standing vacant, although it was handed over to his Department in October last for the accommodation of European volunteer workers; and will he make arrangements for the immediate use of this accommodation in order that the textile factories in the neighbourhood may be able to increase their production.

Mr. Isaacs: It is not possible to use Wells House Hydro for the accommodation of textile workers until some necessary adaptations have been completed. A new boiler has now been installed, and it is hoped to complete other work in time to secure partial occupation in about three months' time and completion in a further couple of months.

Colonel Stoddart-Scott: Is the Minister aware that no action was taken until this Question was put on the Order Paper? Why were five months allowed to elapse without any action whatever being taken?

Mr. Isaacs: The hon. and gallant Gentleman is misinformed. It was the question of the installation of the boiler which was holding us up, and that was in hand long before the Question was on the Order Paper. I do agree, however, that there has been delay. We badly need this place, and we shall press for it as hard as we can.

Appointments Office, Cardiff

Mr. G. Thomas: asked the Minister of Labour the number of persons employed at the Appointments Office, Cardiff; the number of persons registered as seeking suitable employment through the medium of the Appointments Office, Cardiff; and the number of people who have been found employment by the Cardiff Appointments Office during the past three months.

Mr. Isaacs: As the answer contains a number of figures, I will, with permission, circulate it in the OFFICIAL REPORT.

Mr. Thomas: Is my right hon. Friend aware that according to the Question on the Order Paper, I require only three lots of figures?

Mr. Isaacs: My hon. Friend may want only three lots of figures, but to give him a full answer necessitates eight sets of figures.

Following is the answer:


 CARDIFF APPOINTMENTS OFFICE.


—
Appointments Register.
Nursing Appointments Register.


No. of persons employed*
54
6




Full-time.
Part-time.


Applicants registered at March, 1948:





In work
491
38
—


Unemployed
324
41
18


Applicants placed in employment, 3 months ended March, 1948
112
127
14


A substantial proportion of the Appointments Office staff are engaged on the administration of the Further Education and Training and Business Schemes and on other duties.


* In addition there are nine cleaners, messengers and telephone operators.

Chefs, Scotland

Mr. Hector Hughes: asked the Minister of Labour how many foreign chefs are registered as employed in Scottish hotels; and how many British and foreign chefs, respectively, are registered as unemployed in Scotland.

Mr. Isaacs: The information is not available.

Mr. Hughes: Has the Minister's attention been drawn to the propaganda of the Scottish Tourist Board in favour of importing foreign chefs while there are plenty of Scottish chefs available?

Mr. Isaacs: I am tempted to say something about haggis. I have not had my attention drawn to that propaganda, but if my hon. and learned Friend will send me details, I shall be glad to look into them.

Wages (Minister's Letter)

Mr. Boyd-Carpenter: asked the Minister of Labour why his recent letter to wage councils and boards has been withdrawn; and whether he will publish the terms of this letter.

Mr. Isaacs: It was brought to my notice that there had been a misunderstanding as to the interpretation to be placed on the terms of this letter and it was, therefore, considered desirable to withdraw it. I propose to circulate another letter in due course. In these circumstances the publication of the original letter would serve no useful purpose.

Mr. Boyd-Carpenter: Does the right hon. Gentleman's answer mean that the difference between the two letters is simply a difference in drafting and not a difference in policy.

Mr. Isaacs: Yes, Sir; in the main, that is so.

Industrial Disputes (Settlement)

Sir John Graham Kerr: asked the Minister of Labour if he will consider the introduction of legislation to set up a special branch of the judiciary to serve as a special court of appeal in industrial disputes not amenable to the existing machinery.

Mr. Isaacs: No, Sir. I do not consider it necessary to add to the machinery which now exists for the settlement of industrial disputes.

Messrs. Leylands (Works Removal)

Mr. Boyd-Carpenter: asked the Minister of Labour whether he has considered the effect upon employment in Kingston-upon-Thames and district of the proposed removal by Messrs. Leylands of their works to Farrington, Lancashire; whether he is satisfied that no unemployment will result from this move; and what action he proposes to take.

Mr. Isaacs: Yes, Sir. I have no grounds for thinking that any unemployment problem will be created and I do not expect any difficulty in placing redundant workers in other employment.

Wales

Mr. Peter Freeman: asked the Minister of Labour what is the percentage

unemployment rate for Wales as compared with England at the latest known date.

Mr. Isaacs: At 16th February 5½ per cent. in Wales compared with 1½ per cent. in England.

Mr. Freeman: In view of the great discrepancy between these figures, can the Minister say what steps are being taken to see that unemployment in Wales is no greater than it is over the rest of England?

Mr. Isaacs: I can say not only what steps are being taken, but what steps have actually been taken. In February, 1946, the percentage in Wales was 9½ per cent. and since that time it has been brought down to 5½ per cent, It is admitted that this is much too high, and active steps are being taken to induce other industries to go to the area.

Oral Answers to Questions — SCOTLAND

Allotments (Tenure)

Lieut.-Commander Clark Hutchison: asked the Secretary of State for Scotland whether he is yet in a position to make a statement in regard to increasing the security of tenure of allotment holders.

The Joint Under-Secretary of State for Scotland (Mr. J. J. Robertson): Security of tenure for allotment holders is one of the matters that are being reviewed in connection with comprehensive proposals submitted by the Scottish Allotments and Gardens Society for amending the Allotments Acts. I am not in a position to make a statement on the matter.

Lieut.-Commander Hutchison: Can the Under-Secretary indicate when he is likely to be able to make a statement, as I asked a question on this subject in January, and nothing seems to have happened?

Mr. Robertson: I am afraid I have nothing to add to what I have said.

Mr. Berry: Is the Under-Secretary aware that, as in Scotland so in England, this has been a burning matter for the last quarter of a century?

Cured Herring

Mr. Henderson Stewart: asked the Secretary of State for Scotland if he is aware of the delay in negotiating a contract with the Control Commission for


Germany for the purchase of 1948 cure of herrings; that this delay is slowing up curers' preparations for the coming fishing season; and what steps he is taking to secure an early settlement.

Mr. J. J. Robertson: Negotiations for the supply of cured herring to Germany are at present in progress and I hope that it will be possible to make an announcement at an early date. I am informed by the Herring Industry Board that, in order to enable curers to complete their preparations with more assurance, the Board are willing to purchase the whole of this year's production of cured herring.

Mr. Henderson Stewart: Can the Under-Secretary explain to the House the reason for this inordinate delay, the damaging results of which I am sure he thoroughly understands?

Mr. Robertson: There is no undue delay in the matter. In view of the fact that the Herring Board have given an assurance that the whole of this year's catch will be purchased by them, the matter does not arise.

Tractors

Mr. Emrys Hughes: asked the Secretary of State for Scotland what supply is available of tractors of the type International Tractor, type 6; and why they are not being released for sale.

Mr. J. J. Robertson: The Scottish 1947 quota of imported high-power standard wheeled tractors which was completed in February of this year did not include any International Type W6 tractors. No machines of this type were imported into the United Kingdom in 1947 and the few which recently arrived were used to complete the 1947 quota for England and Wales.

COTTON INDUSTRY

Mr. Osborne: asked the Prime Minister if he will make a statement on the results of the conference which he held on 22nd March with representatives of both sides of the cotton industry; and if he is satisfied with the steps taken to raise the output of cotton yarn to the new target of 20 million lb. a week.

The Prime Minister (Mr. Attlee): My meeting on 22nd March with the leaders of both sides of the cotton industry

afforded an opportunity for a frank exchange of views on the problems which must be overcome if the production and export targets for the industry are to be met. It was agreed that given the goodwill and co-operation of all concerned ways could be found to achieve the targets for 1948. I am satisfied that the Government are taking all practicable steps to this end.

Mr. Osborne: In view of the satisfactory outcome of this conference, will the Prime Minister consider holding similar conferences for both sides of other industries, especially the building industry, where production needs gingering up?

The Prime Minister: Wherever necessary, I do so. This is not the first. I have had a number of conferences of this kind.

Squadron-Leader Fleming: Did the conference consider the question of the provision of night and day nurseries?

The Prime Minister: Yes, that was one of the matters under consideration.

Sir W. Smithers: On a point of Order, may I ask you, Sir—there is probaly some good reason for it—why the long-established practice of the Prime Minister's Questions starting at No. 45 is not followed at the present time?

Mr. Speaker: There is no point of Order concerned. There were not enough Questions down.

Sir W. Smithers: Further to that point of Order, there are 61 Questions; and why should the Prime Minister not retain his honoured place at No. 45?

Mr. Speaker: Certain Ministers have precedence, and if we have not reached No. 45, and the Questions to those Ministers, which have been put down have been exhausted, the Prime Minister comes on at No. 20 or No. 21, or at any other time. It is not laid down definitely that he comes on at No. 45 and No. 45 only.

Sir W. Smithers: This is the first time this has happened in 24 years.

CIVIL SERVICE (COMMUNISTS AND FASCISTS)

Squadron-Leader Fleming: asked the Prime Minister which of the three retired civil servants appointed to act as an appeal


tribunal, for screened Communists or Fascists, has any legal qualifications.

The Prime Minister: As I explained in my statement of 25th March, this Advisory Board is not a legal tribunal nor a court of appeal. I do not, therefore, regard legal knowledge or experience as an essential qualification for its members, though in fact Sir Maurice Holmes has been called to the Bar.

Squadron-Leader Fleming: Is the Prime Minister aware that, although he does not consider legal qualifications necessary, it is a fact that if such a tribunal were presided over by a judge of His Majesty's High Court it would give greater confidence to the public and to those concerned.

The Prime Minister: I do not think I quite agree with the hon. and gallant Member. I think a certain amount of legal training is always useful in order to enable one to judge anything, but in this matter I think experience and knowledge of human nature are, perhaps, better than technical legal qualifications.

Mr. W. J. Brown: Is the Prime Minister aware that what both the public and public servants want in this connection is not legal erudition but political horse-sense?

The Prime Minister: indicated assent.

Lieut.-Colonel Sir Thomas Moore: Apart altogether from the legal qualifications as laid down in the Question, what is equally important is whether these gentlemen—without passing any reflection whatever upon them—have any political views?

The Prime Minister: These gentlemen have been civil servants for a great many years. I have no knowledge whatever of their political views. I think we can take it that they are impartial, as the Civil Service always is.

Sir T. Moore: It is civil servants whom they are called upon to judge.

Oral Answers to Questions — NATIONAL FINANCE

Entertainments Duty

Mr. E. P. Smith: asked the Chancellor of the Exchequer what is the total amount contributed to the revenue by the

living theatre in the form of Entertainments Duty from the inception of tax down to the end of the last accounting period.

The Financial Secretary to the Treasury (Mr. Glenvil Hall): About £32 million has been paid in Entertainments Duty by the public who have visited the living theatre, since 1st July, 1935, the earliest date from which separate figures have been kept.

Mr. E. P. Smith: Will the right hon. Gentleman ask his right hon. and learned Friend to bear that figure in mind approximately two hours from now?

U.K.—Eire Customs Frontier (Officials)

Mr. Skeffington-Lodge: asked the Chancellor of the Exchequer what number of Customs officials is regularly employed in manning the Customs frontier between the United Kingdom and Eire.

Mr. Glenvil Hall: There are 72 members of the Customs and Excise Department regularly employed on the land boundary between the United Kingdom and Eire. In addition, the Royal Ulster Constabulary undertake preventive duties in connection with the boundary.

Mr. Skeffington-Lodge: Is my right hon. Friend aware that there is here a considerable waste of manpower involved and, in order to release these men for more productive work, will he use his influence to ensure that the absurdity commonly known as partition comes to an end?

Budget (Explanatory Booklet)

Mr. Erroll: asked the Chancellor of the Exchequer whether, in view of the popularity of the short version of the Economic Survey, he will have prepared a similar popular edition of the Budget.

Mr. Glenvil Hall: I hope it may be possible to publish a booklet dealing in simple terms with the Budget and the White Paper on the National Income soon after Budget day.

Mr. Erroll: May I ask the right hon. Gentleman whether any steps have already been taken in the preparation of this book?

Mr. Glenvil Hall: Of course they have. It is hoped to publish it soon after Budget day, which happens to be today.

Mr. Erroll: Does that mean that the Budget has already been revealed to the Central Office of Information?

Mr. Glenvil Hall: I think it is common sense that preparations can be made to a given end without necessarily giving away anything which should not be given away.

Mr. Sydney Silverman: Can my right hon. Friend indicate whether, if such an edition were published, it would really be popular?

Imports from Canada

Mr. Platts-Mills: asked the Chancellor of the Exchequer if he will make a statement on the outcome of the discussions regarding the arrangements needed to finance British imports from Canada from 1st April.

The Economic Secretary to the Treasury (Mr. Douglas Jay): As the hon. Member will now have seen, the present arrangements for financing imports into the United Kingdom from Canada have been extended to 14th April.

National Coal Board (Magazine)

Sir John Mellor: asked the Chancellor of the Exchequer why the words "The N.C.B. Magazine" were printed on the covers of the first six issues of "Coal," which were published by the Stationery Office at the expense of the taxpayers.

Mr. Glenvil Hall: I would refer the hon. Member to the last part of the reply which my right hon. and learned Friend the Chancellor of the Exchequer gave to him on 20th January.

Sir J. Mellor: Is the right hon. Gentleman aware that the letters N.C.B. led people to suppose that those six issues were published at the expense of the National Coal Board? Will he say why the loss of £4,000 on those six issues was not charged to the National Coal Board?

Mr. Glenvil Hall: My right hon. and learned Friend, on an earlier Question, gave an answer at some length to the point which the hon. Baronet now raises for the second time, and I cannot add to what my right hon. and learned Friend then said.

Mr. Keeling: Will the right hon. Gentleman give an assurance that no further

expenditure purporting to be at the cost of the National Coal Board will be debited to the taxpayers?

Mr. Glenvil Hall: This publication has now passed completely to the National Coal Board.

Sir J. Mellor: Will the right hon. Gentleman say why that was not done in the first instance? Why were the first six issues published at the expense of the taxpayers?

Mr. Glenvil Hall: My right hon. and learned Friend, I repeat, made it perfectly plain to the House why the first six issues were charged as they were.

Mr. Stokes: It comes to the same thing in the end.

Imported Fur Coats (Tax)

Mr. Boyd-Carpenter: asked the Financial Secretary to the Treasury whether he will now agree to waive claims for Import Duty and Purchase Tax on the nine fur coats which recently arrived in this country in the s.s. Eucadia as a gift from the people of Boston, Massachusetts.

Mr. Glenvil Hall: Yes, Sir.

Advertising (Socialised Industries)

Mr. Thornton-Kemsley: asked he Chancellor of the Exchequer if he has made a request, similar to that made to the Federation of British Industries, to the Boards of the socialised industries to reduce voluntarily their expenditure of money and materials on advertising.

Mr. Jay: The plan of action formulated by the Federation of British Industries was brought to the notice of the Boards of the socialised industries.

Mr. Thornton-Kemsley: Will the hon. Gentleman look into the apparently gross waste of manpower and materials involved in the advertising activities of London Transport, and will he consider also if it is necessary for a State monopoly to publicise its activities at all?

Mr. Jay: I think there are good reasons for some amount of advertising, but I understand that some reductions have already been made as a result of these representations.

Mr. Joynson-Hicks: Will the hon. Gentleman go further, and bring this point to the notice of the Transport Commission? Will he also make an appeal to them similar to that addressed to the Federation of British Industries?

Mr. Jay: Exactly the same procedure has been followed as in the case of private undertakings.

Oral Answers to Questions — TRADE AND COMMERCE

Paper Consumption

Mr. Stanley Prescott: asked the President of the Board of Trade what was the total paper consumption in the United Kingdom in the years 1938–47, respectively; and what is estimated to be the total consumption for the year 1948.

The Parliamentary Secretary to the Board of Trade (Mr. Belcher): With the hon. Member's permission I will circulate the figures in the OFFICIAL REPORT.

The quantities are as follow:





Thousand Tons


1939
…
…
3,700


1940
…
…
2,350


1941
…
…
1,650


1942
…
…
1,400


1943
…
…
1,350


1944
…
…
1,450


1945
…
…
1,550


1946
…
…
1,900


1947
…
…
2,100


1948 (estimated)
…
…
2,050


The above figures are approximate. Precise figures of home consumption of paper and board are not available.

Watering Cans

Mr. Murray: asked the President of the Board of Trade if he is aware of the shortage of watering cans suitable for greenhouse work; if he will take immediate steps to improve the supply of these important utensils at this time of the year; and what was the number of greenhouse watering cans produced in 1947.

Mr. Belcher: I am aware of the scarcity of watering cans for greenhouse work, which is due mainly to the shortage of suitable types of steel. I am, however, satisfied that the manufacturers of these articles are getting their fair share of the material available. I regret that I have no information as to the number of these cans produced during 1947.

Mr. Murray: Is my hon. Friend aware that many wholesalers have on their books people who have been waiting for watering cans for over two years, and that it is very difficult to carry on greenhouses without these utensils?

Mr. Belcher: I know that there is a shortage of these things. Everything is being done to produce as many as possible, but there is a shortage of raw material.

Mr. John Lewis: Is my hon. Friend aware that anyone with any ingenuity can, by taking an ordinary can and making holes in the bottom, make a watering can?

Bird Scaring Ropes

Mr. Percy Wells: asked the President of the Board of Trade if he will make available for the protection of growing crops, a supply of bird scaring ropes, the lack of which is involving Kent farmers in serious loss.

Mr. Belcher: So far as I am aware, suitable ropes for bird scaring can be obtained through normal trade channels. If, however, my hon. Friend will give me particulars of the case which he has in mind where difficulties in obtaining these ropes have arisen in the county of Kent, I will have the matter looked into.

Mr. Wells: Is my hon. Friend aware that in no part of Kent are these bird scaring ropes obtainable at the present time, and that this is having a very adverse effect on the food production drive? Will he look into this matter, as it is one on which I think he has been very badly advised?

Mr. Belcher: Certainly.

Leather Allocations

Mr. Swingler: asked the President of the Board of Trade if he is aware that leather stocks in the hands of boot and shoe manufacturers in some parts of the country have considerably improved; and if he will sympathetically consider new applications for licences to purchase leather.

Mr. Belcher: The allocations of leather made to shoe manufacturers at the beginning of each quarterly period are based on the total estimated supplies which will become available during the period, with


a small allowance for contingencies. The issue of further licences during the period would therefore merely result in over-licensing.

Mr. Swingler: is my hon. Friend aware that some manufacturers have recently stated that they have embarrassingly large stocks of leather, and that this is very irritating to those who have been refused licences? Will he inquire into this position?

Mr. Belcher: I do not think it is possible to generalise. I think some manufacturers have fairly large supplies of leather, but it is by no means certain that we are going to be able to maintain our leather purchases at the present rate.

Sir T. Moore: Will the hon. Gentleman ensure that the leather so allocated is made into shoes that will fit?

Mr. Belcher: I should have thought that it was for the purchaser to decide whether the shoes fitted or not. We cannot manufacture shoes to fit every pair of feet in the country.

Mr. Odey: In view of the fact that the supply of leather for this country's needs is quite adequate, will the Minister consider the removal of control altogether?

Mr. Belcher: The supply of leather at the present time may be adequate, but, as I have said, that may not continue to be the case.

Utility Mattresses

Mr. Harrison: asked the President of the Board of Trade if he will consider permitting larger allocations of materials for the manufacture of utility mattresses and thereby establish conditions that will keep in employment a number of manufacturing plants in the Nottingham area.

Mr. Belcher: The principal material concerned is ticking. Ticking is in very strong overseas demand, especially in dollar markets, and the need to increase textile exports is so urgent that it is not possible at present to earmark more production for home use. Everything practicable is being done to ensure that supplies of other items, such as springs and hessian, are kept in step.

Mr. Harrison: Will my hon. Friend re-examine the method of allocating the supplies of raw material between non-utility and utility production?

Mr. Belcher: Perhaps my hon. Friend will let me have some idea of what he has in mind, and then I will consider it.

Educational Books

Mr. Blyton: asked the President of the Board of Trade if he is aware of he continuing shortage of text books and books in the schools of Durham County; and if he will increase the supply in the area.

Mr. Belcher: I am afraid that the shortage of educational books is not confined to any one area, but is general. We are seeking to overcome it in consultation with the Ministry of Education.

Mr. Blyton: Is my hon. Friend aware of the deep resentment felt in educational circles at the fact that cheap, trashy novels can be bought at booksellers while children go short of their text books?

Mr. Belcher: I am very well aware of the feeling that exists in educational circles about the shortage of educational books. We have done a good deal already to encourage and support the production of these books; but this shortage is mainly due to the exhaustion during the war years of stocks of educational books, and to the paper difficulties. We shall do all we possibly can.

Domestic Crockery

Mr. Blyton: asked the President of the Board of Trade if he is aware of the great shortage of cups and saucers in the North-East area; and if he will take steps to improve the distribution of supplies to this area.

Mr. Belcher: The output of domestic crockery is increasing, and following a drive for greater production recently opened in North Staffordshire, I am confident that the rate of increase will be still greater. However, because of the great export opportunities of the industry, these increased supplies must be sent abroad, and I cannot promise any early improvement of home market supplies, although I know that all domestic crockery is very scarce in the shops. I am however, having inquiries made to see whether the North-East area is exceptionally badly supplied. If it is, I will try to arrange for some special deliveries.

Mr. Blyton: Will my hon. Friend also see that the quality is better; because the


cups being supplied at present are like jam jars, rather than cups?

Mr. Belcher: To the best of my knowledge there has been no complaint about the quality of the crockery which is being supplied, but if my hon. Friend will let me know of any complaints, I will do what I can about them.

Mr. Henderson Stewart: Is the hon. Gentleman aware that the same acute shortage has occurred in the East of Scotland? Is he satisfied that the method of allocating such limited supplies as are available is the proper method?

Mr. Belcher: The answer is that there is no system of allocation. We depend upon the manufacturers themselves to send crockery where they feel it is required. If there are any particular examples of places where the shortages are greater than normal, we should be prepared to ask the manufacturers to co-operate in relieving the shortages.

Clothing Coupons (Textile Workers)

Mr. J. Lewis: asked the President of the Board of Trade if he is aware that the allocation of additional clothing coupons to female workers in the textile industry will have the effect of bringing thousands of girls back to the mills and of attracting new recruits to the industry; and if he will take such steps to apply this principle of favoured terms to the textile industry so as to bring it into line with other industries where it exists in varying forms.

Mr. Belcher: The assumption in the first part of the Question can only be a matter of opinion. I do not know to what favourable terms my hon. Friend refers in the second part of his Question; it is a well established principle of clothes rationing that supplementary coupons should be given only to meet special needs, and I do not think we should be justified in making an exception from this rule.

Mr. Lewis: Will the Parliamentary Secretary bear in mind that in certain areas some miners receive free coal, and that certain railway workers receive privileged tickets; and, having regard to the

fact that to reach our target for the expansion of the cotton industry it is necessary to recruit at a very much greater rate than we are doing at the moment, would he reconsider this question, in order to bring girls back to the mills?

Mr. Belcher: It is certainly true that we need to recruit people into the cotton and textile industry at a greater rate, and I have no doubt that giving additional coupons would be an incentive. On the other hand, this is the kind of thing which, if applied to the cotton and textile industry, would precipitate a similar demand for quite a number of other industries, and I do not think it would be wise.

Colonel Dower: Is not the Parliamentary Secretary aware that wholesalers have large stocks of which they cannot dispose?

Mr. Belcher: I am not aware of that.

Mr. House: Would my hon. Friend consider extending this request to the steel and the building industries?

Mr. Sidney Shephard: Is it not a fact that female workers in the textile industry are given the "industrial ten" coupons?

Mr. Belcher: Yes, Sir.

Raw Cotton (Prices)

Mr. Osborne: asked the President of the Board of Trade if he is aware of the new policy of the Raw Cotton Commission of bringing its selling prices into line with those at present ruling in the principal producing countries; how he reconciles this with the previous policy of stabilising domestic prices; and if he will make a statement.

Mr. Belcher: With regard to the first part of the Question, I would refer the hon. Member to the reply given on 25th March to my hon. Friend the Member for Spen Valley (Mr. Sharp). With regard to the second part of the Question, the prices of raw cotton to spinners were changed from time to time in the past by the Cotton Control and I have no reason to doubt that the Raw Cotton Commission will continue in the future to give due weight to the desirability of avoiding unnecessary disturbances of domestic prices.

Mr. Osborne: Is it proposed, in the case of other industries, to adopt this new price control for other raw materials owned by the Government; and is the Parliamentary Secretary aware that this increase in the price of cotton is making it difficult to sell our exports, especially in Canada and America?

Mr. Belcher: As regards the second part of the supplementary question, we are aware that rises in the price of raw cotton must have a disturbing effect, if not a completely adverse effect, upon the prices of our exported goods, and might interfere with the possibility of exporting to dollar countries. The first part of the supplementary question raises a large issue, and a Question should be put down on the Order Paper; it is certainly not one for me to answer.

Overseas Visitors (Tourist Voucher Books)

Colonel J. R. H. Hutchison: asked the President of the Board of Trade what arrangements have been made to allow visitors from countries which are in the hard currency areas to purchase goods in shops while they are in Britain.

Mr. Belcher: I would refer the hon. and gallant Member to the reply given to my hon. Friend the Member for Kennington (Mr. Gibson) on 23rd March.

Colonel Hutchison: In view of the fact that, at any rate until recently, both in the United States and among shopkeepers in this country the system was not known, understood or publicised, is it sufficient to rely on a previous answer given to a previous Question?

Mr. Belcher: A very full reply was given, and the scheme was outlined by my right hon. Friend. It has been given publicity. I am quite prepared to inquire to see whether any more publicity is needed, but the scheme is set out very fully in the reply given on 23rd March.

Footwear (Coupon Rate)

Mr. Sidney Marshall: asked the President of the Board of Trade whether he will now reduce the coupon points value for all footwear, in view of the greatly increased production and accumulating stocks in retailers shops.

Mr. Belcher: Although there has recently been a welcome improvement in production and stocks, there is no guarantee that the present levels can be maintained, since the footwear industry depends to a very considerable degree on raw materials imported from hard currency areas. A reduction in the coupon rates could not, therefore, be justified at present.

Mr. Marshall: Can the Parliamentary Secretary give further consideration to it, especially in view of the statement that supplies are very ample, made in the House this afternoon by the hon. Member for Howdenshire (Mr. Odey), who is himself a large producer of leather in this country, and the statement made by the President of the Board of Trade to the Leicester boot and shoe industry, that stocks are piling up in the retailers' shops because there are not enough coupons to buy them?

Mr. Belcher: As I have already indicated, if supplies can be maintained at their present level we shall be prepared to look into the coupon question; but at present we have no guarantee that we shall be able to maintain supplies of raw materials at their present level.

Mr. Drayson: Can we take it from the original answer that, where the Government find a surplus they immediately set about organising a scarcity?

Mr. Belcher: No.

Mr. Osborne: Is not the Parliamentary Secretary aware that there is a danger of considerable unemployment among the lower grades in the boot and shoe manufacturing industry, because of the coupon position; and will he look into the question from that angle?

Mr. Belcher: It has been mentioned to me that there is the possibility of unemployment in the boot and shoe manufacturing industry. I can assure hon. Members that these things are kept under constant review, and that it is our anxious desire not to produce a scarcity, but to make the best use of the available material.

Imported Printed Matter

Sir W. Smithers: asked the President of the Board of Trade if he is aware that Board of Trade Notice 1865, of 16th March, affects the importation of about 100,000 trade and technical journals, magazines and periodicals; that by


eliminating booksellers and publishers he is losing dollars earned in trade discount of about 20 per cent. of the value; and if he will reconsider his decision in the light of the fuller details which have been sent to him.

Mr. Belcher: I assume that the hon. Member is referring to Notice to Importers No. 281 of 17th March, announcing an amendment to the open general licence for the import of printed matter by post. The point he raises is under consideration.

Sir W. Smithers: Will the Parliamentary Secretary bear in mind that the important words of this Question are "trade and technical journals"—which will not come in—because they are virtually the raw materials essential to the business of these firms; and why does he voluntarily throw away the 20 per cent. dollar discount which they would otherwise get?

Mr. Belcher: I will bear in mind the point made by the hon. Member, together with all other points in connection with this Question.

Manilla Paper (Advertising Use)

Mr. Spearman: asked the President of the Board of Trade (1) how much board manilla has been allocated to Telphads Limited for advertising purposes;
(2) whether, in view of the acute shortage of newsprint, he will restrict the use of board manilla for advertising purposes.

Mr. Belcher: I am having inquiries made, as no manilla paper has been licensed by the Paper Control to Telphads Limited for advertising purposes. The use of manilla paper is already severely restricted by the licensing system. Further restriction would not ease the shortage of newsprint.

Mr. Spearman: In view of the fact that the folder in question, made by Messrs. Telphads Limited, is apparently intended to cover the "Radio Times," can the Minister say whether the B.B.C. are involved in this waste of paper?

Mr. Belcher: No, I certainly cannot say. I should not have thought so, but, as I

have indicated, we are having inquiries made, since no paper was licensed for this purpose; we are trying to find out how they got it.

SUGAR CONFECTIONERY EXPORTS

Mr. Erroll: asked the Minister of Food what were the total exports of sugar and confectionery, respectively, to Canada during 1947 in terms of quantity and value.

The Parliamentary Secretary to the Ministry of Food (Dr. Edith Summerskill): There were no exports of sugar from the United Kingdom to Canada during 1947. Total exports of chocolate and sugar confectionery to Canada from the United Kingdom in 1947 amounted to 18,570 cwt., valued at £161,676.

Mr. Erroll: In future, could these figures be included in the Trade and Navigation Returns?

Dr. Summerskill: We will consider that.

FIRE SERVICES (DISCIPLINE)

Sir J. Mellor: asked the Secretary of State for the Home Department why, by Regulations 11 and 15 of the Fire Services (Discipline) Regulations, S.I., 1948, No. 545, he has deprived members of fire brigades, while detained in legal custody, of the right of attending disciplinary proceedings against them, and has authorised the conclusion of the hearing of such proceedings in their absence; and whether he will rescind these regulations.

The Under-Secretary of State for the Home Department (Mr. Younger): These regulations were made with the agreement of the National Joint Council for Local Authorities' Fire Brigades in England and Wales, on the understanding that the Council would be free, after further consideration of the details, to recommend amendments. My right hon. Friend will see that the point raised by the hon. Baronet is further considered in connection with any revision of the regulations.

Sir J. Mellor: In order that these regulations may be further considered, I beg to give notice that tomorrow night I shall move a Prayer to annul the regulations.

CORNISH FISHERIES (PROTECTION)

Mr. Douglas Marshall: asked the Parliamentary Secretary to the Admiralty if he will arrange for a fishery protection vessel adequately to patrol the fishing grounds of the South Cornish coast.

The Parliamentary Secretary to the Admiralty (Mr. John Dugdale): I presume the hon. Member is suggesting a permanent patrol of the fishing grounds of the South Cornish Coast. This could be provided only at the expense of other areas. I would, however, like to make it quite clear that the Royal Navy will continue to give every possible protection to British fishing fleets.

Mr. Marshall: Is the Minister aware that the Looe fishing fleet and the hon. Member for Bodmin would like to thank the Admiralty, the commander-in-chief at Mount Wise, and the officers and men of the Fishery Protection Fleet for their readiness to help, which they were willing to give the moment this incident was reported to them?

Mr. Charles Williams: Will the Minister extend the patrol mentioned in the first part of his answer to the South coast of Devon as well?

Mr. Dugdale: There is no question of the South coast of Devon not getting adequate protection. The fisheries protection patrol goes to every part of our coast from time to time to see that all are adequately protected.

Commander Noble: How many ships are employed on that service now?

Mr. Dugdale: Quite a number of ships. Altogether there are five.

Air-Commodore Harvey: Would the Parliamentary Secretary consult with the Secretary of State for Air with a view to using flying boats, which could probably do the job better and cheaper?

Mr. D. Marshall: asked the Minister of Agriculture if he is aware that foreign trawlers have damaged the gear and interfered with the catch of the Looe fishing fleet; and will he make representations upon this matter to the countries concerned and press for compensation.

The Joint Parliamentary Secretary to the Ministry of Agriculture (Mr. George Brown): Yes, Sir. The matter is being investigated. Such action as may be necessary will be taken to obtain compensation.

Mr. Marshall: May I ask the Parliamentary Secretary what steps he proposes to take?

Mr. Brown: Clearly, the first step is to identify the offender. When that is done, a claim will be referred by the Foreign Office to the Government concerned. If necessary, on further inquiry, we shall probably have to lodge a claim in the courts of the country concerned.

Mr. Marshall: Will the Minister assure the House that there is no doubt that the Government will press for compensation?

Mr. Brown: I have already already said that we are investigating the matter, and that we shall press a claim against the country concerned.

GERMANY (POTASH EXPORTS)

Sir Stanley Reed: asked the Secretary of State for Foreign Affairs whether any potash was exported from Germany during the 12 months to the latest convenient date; the destination of any exports and the purpose to which any funds realised were directed.

The Under-Secretary of State for Foreign Affairs (Mr. Mayhew): During the 12-months period to 31st March, 1948, approximately 32,000 tons of potash were exported from the bizonal area. Recipient countries were Czechoslovakia, Belgium, U.S.A., and the United Kingdom. The proceeds were used to buy essential goods and services for the combined zone.

Sir S. Reed: May I ask how the Under-Secretary reconciles this user of the German exports of potash with the guarantees to those who subscribed to the German potash loan?

Mr. Mayhew: No, Sir. The German exports must in present circumstances go first to pay for essential German imports.

Sir S. Reed: Will the Under-Secretary give consideration to the definite guarantee that the first charge on all realisations of potash exports should go to the servicing of the loan?

Mr. Mayhew: This is a matter concerning the quadripartite agreement, that the first claim on the proceeds of German exports should go towards German imports. While the taxpayers of Britain and the United States are bridging the gap in the German balance of payments, I am sure that should continue.

Brigadier Medlicott: Is the Under-Secretary aware that there is a serious shortage of potash in Norfolk and other parts of the country, and will he, therefore, do all he can to increase the allocation of potash to the United Kingdom?

Mr. Mayhew: Yes, Sir, as a Norfolk M.P. I appreciate that. This is a matter of international allocation, which is borne in mind in making these exports.

Major Legge-Bourke: Will the Under-Secretary bear in mind the state of potash production in Palestine, and will he say whether any efforts are being made to—

Mr. Speaker: This Question concerns potash from Germany and not from Palestine.

Major Legge-Bourke: Has the Under-Secretary attempted to cover any possible loss of potash from Palestine by getting potash from Germany?

MINISTRY OF PENSIONS (EDUCATION ALLOWANCES)

The following Question stood on the Order Paper in the name of Mr. WILLIAM Ross:

2. To ask the Minister of Pensions if he is aware of the hardships caused by the present method of awarding grants towards education by his Department; and whether he will take steps to remedy this.

Mr. Buchanan: I will, with permission, make a statement in reply to Question No. 2. I am aware that a number of applications for education allowances have been refused because of the non-fulfilment of the requirement that the father would have been able to provide the type of education proposed had he not been a war casualty. I have not felt satisfied about this, and I am pleased to say that as from

the 1st April this requirement will no longer need to be fulfilled.

Oral Answers to Questions — BERLIN

British and Russian Aircraft (Collision)

Mr. Churchill: (by Private Notice) asked the Secretary of State for Foreign Affairs whether he has any statement to make on the present situation in Berlin, including the destruction of the British passenger aircraft with the loss of 14 lives.

The Secretary of State for Foreign Affairs (Mr. Ernest Bevin): Yes Sir. I should like if, if I may, to answer these two points separately.
As the House will have heard, a British European Airways aircraft was approaching Gatow aerodrome in the British sector of Berlin from Hamburg yesterday afternoon when a Soviet fighter aircraft collided with it. As the result of this both aircraft crashed to the ground and all the occupants were killed. I wish to take this opportunity to express the deepest sympathy of His Majesty's Government, and I am sure, of the House, with the relatives and friends of the victims in this appalling occurrence. The British aircraft fell 2½ miles North-West of the Gatow airfield in the Russian zone, and the Soviet fighter fell just inside the British sector of Berlin close to Gatow airport.
I am awaiting a full account of the disaster. The information which I have received so far shows that the British aircraft was proceeding on the ordinary route, and that according to routine instructions, warning should have been given by the Soviet authorities that their fighter was in the air. No such warning was given. After the crash the Soviet authorities took immediate charge of the British aircraft, and later in the day British representatives went to the scene to investigate and to gain access to the bodies and the baggage. A cordon of British troops has been placed round the Soviet aircraft, with one Soviet sentry.
The Soviet General, with whom the British Commandant in Berlin dealt, expressed a desire to deal with the occurrence with proper calmness. Immediately on hearing of the disaster, the British Commander-in-Chief, General Robertson, communicated with the Soviet Commander-in-Chief, Marshal Sokolovsky. In


this communication, after stating the facts that I have given, General Robertson asked for an immediate assurance that Marshal Sokolovsky condemned as strongly as he did that the Soviet aircraft was being flown without prior notification and in a manner to cause the catastrophe. He also requested a positive assurance that British aircraft using the corridor in accordance with our mutual agreement would be immune from molestation. General Robertson also reserved all the rights of His Majesty's Government.
General Robertson also had an interview with Marshal Sokolovsky yesterday evening. General Robertson's actions in this matter have our full approval. At the interview, General Robertson made it plain that he had no wish to prejudge the cause of the catastrophe until a proper inquiry had been held. The form and scope of this inquiry is at present under consideration. Marshal Sokolovsky then gave General Robertson orally the assurances for which the latter had asked. A written reply to General Robertson's communication is awaited. In view of the assurances which have been received, the British Commander-in-Chief has countermanded the instructions which he gave that British civil aircraft should receive fighter protection. I understand that the United States Commander-in-Chief took similar action.
I wish to make it clear, pending the results of tae inquiry, that I have no information to suggest that the conduct of the Soviet aircraft was in any way the result of direct instructions from the Soviet authorities. Routine flights to and from Berlin by British aircraft are continuing in the normal way.
In view of what I have said, I trust the House will agree that it is undesirable that there should be any further speculation or recrimination about this tragedy. I am pressing for an inquiry to be held as soon as possible, and until the results are known I suggest that judgment should be reserved.

General Situation

Mr. Churchill: Will the right hon. Gentleman give the reply to the second part of the Question?

Mr. Bevin: I would now like to make a statement on the general situation in Berlin. The House will have seen from

the Press the general trend of events there. The difficulty began with the departure of the Soviet representatives from the Control Council on 20th March. The House will remember that, owing to the failure to establish economic unity in Germany, we have been compelled to establish, in conjunction with the United States, a bi-zonal authority. Further, owing to the breakdown of the four-Power meeting in November and December, it was decided that there should be consultations with the three Powers in the Western zones, in order to consider what steps could be taken to make these three zones viable.
The Soviet representative demanded a report of these discussions, which were purely consultative. Our representatives in Berlin were not aware that this demand was going to be made, and declined to present a report. Accordingly, the Soviet representative walked out. As no decisions were reached at this consultative conference, there was no report to make. Therefore, meetings of the Control Council and its subordinate committees and directorates are at present in abeyance.
Another problem which has arisen is in connection with the Berlin City Kommandatura, where the Soviet authorities refused to attend eight of the committees.
We are ready to discuss the reorganisation of this body, and, in fact, apart from these eight committees, the body is still functioning. Arising out of all this, the British representatives, in consultation with their United States and French colleagues, are doing their best to negotiate with the Soviet authorities for a resumption of the normal activities of all these bodies in accordance with existing agreements.
These acts of the Soviet authorities were followed by another unilateral action affecting travel regulations between the British zone and British sector of Berlin. On 31st March the Soviet authorities announced the introduction of new regulations at 24 hours' notice. No opportunity was given for consultation or discussion, notwithstanding the fact that there is a clear four-Power agreement for the occupation of Berlin, of the validity of which there can be no doubt. It should be explained, however, that the regulations for travel to and from Berlin are not so clearly specified. When the arrangements


were made a good deal was taken on trust between the Allies, and until this event travel has been reasonably satisfactory. On the roads, British travellers have shown their documents. On military trains this has not been required, since the trains were supplied by and were under the exclusive control of the British military authorities.
This new difficulty which has arisen results from the Soviet demand that Soviet military personnel should board the trains and examine the passengers' documents.
This whole question of travel is now under discussion between the Soviet authorities on the one hand and the British, American and French on the other. We must await the result of these discussions, and I should make it clear that His Majesty's Government would welcome an agreement. In view of the arrangements for the occupation of Berlin, we cannot yield our right to free access to and from these sectors of occupation, which is essential to maintain our Forces and fulfil our obligations as an occupying Power.
I do not want to exaggerate the issues or to say anything which would aggravate an already difficult situation. I regret what has happened, but if there is good will the difficulties are capable of solution. The British Commander-in-Chief and the British authorities in Germany have the full confidence of His Majesty's Government in handling the position.

Mr. Churchill: The House, I am sure, will defer to the wish of the Foreign Secre-

tary that this matter should not be carried further at this moment, and I should like to thank him for the full, calm and factual statement which he has made. May I ask the Leader of the House whether he will consider, in discussion with the Foreign Secretary and the Prime Minister, when it will be convenient to have a Debate on Foreign Affairs, which has become necessary, although, naturally, the opportunity must be carefully selected.

The Lord President of the Council (Mr. Herbert Morrison): Yes, Sir, we agree in principle with the right hon. Gentleman that there should be a Debate on Foreign Affairs at a not distant date. I will be quite frank: we are in some difficulty about the legislative programme, and it will be desirable, as I am sure the right hon. Gentleman will agree, that there should be a little give-and-take between the usual channels, so that time can be found. In principle, we agree that there should be such a Debate.

Mr. Norman Smith: Does not my right hon. Friend think that, in view of the danger there must always be of foolish actions by irresponsible subordinates, the best arrangement is that British aircraft travelling to and from Berlin on their lawful occasions should be escorted by Royal Air Force fighters, with instructions to shoot down interlopers?

NEW MEMBER SWORN

Edward Lancelot Mallalieu, Esquire, for the County of the Parts of Lindsey (Brigg Division).

Orders of the Day — WAYS AND MEANS

Considered in Committee.

[Major MILNER in the Chair]

Orders of the Day — FINANCIAL AND ECONOMIC STATEMENT

3.39 p.m.

The Chancellor of the Exchequer (Sir Stafford Cripps): As the Committee is aware, it has been arranged this year to discuss the Economic Survey at the same time as the Budget proposals, and the arrangement will, I think, be of convenience both to the Committee and to the country. It means, I am afraid, that in opening these two closely linked subjects I shall have to detain the Committee for rather a long time.
Government expenditure and revenue ought not to be considered in isolation from their effects upon the general economic prospects of the country, nor can any survey of the economic situation of the country be complete without a knowledge of the Government's Budget proposals. The combination under a single Minister of the co-ordination of our external and internal economy with the control of Government expenditure and revenue was an important change in our planning machinery. The new task of the Chancellor of the Exchequer is not merely to balance the Budget; it is a much wider one—to match our resources against our needs so that the main features of our economy may be worked out for the benefit of the community as a whole.
This means that the Budget must be complementary to, and, indeed, in some sense a part of the National Economic Plan. It will, therefore, be convenient to the Committee, I hope, if I deal with the subject matter of this speech in the following order: First, I will draw attention to some of the more important aspects of the Economic Survey. I will then pass on to the out-turn of the 1947–48 Budget, and then to an examination of the prospects for 1948–49 on the basis of the present taxation. Finally, I will state the proposals for new taxation or for remission of taxation which form part of the present Budget.

ECONOMIC SURVEY

The Economic Survey gives the provisional estimates for the national income and expenditure for the calendar y ear 1948. It sets out the facts as to our immediate problems and the resources which we estimate will be available to meet our needs. Estimates of this kind, as the Committee will understand, are always bound to be somewhat provisional and uncertain, and, in circumstances such as those which confront us today, they are pretty certain to be subject to revision and correction as the year progresses. It is, however, essential that all those responsible for our production effort, whether as administrators, employers, technicians or workers, should have as full knowledge as is available if they are to join—as we want them to join—with the Government in framing and approving the general strategy of our production.

Since we are, and propose to remain, a democracy, we must remember that the economic plan is not something of which any Government can guarantee the execution. The plan lays down the necessities of the situation—what we, as a nation, must do to get the best results for the people as a whole. In some matters, the Government can assist in bringing about the desired results; in others, it must be for the people themselves to conform voluntarily to the needs of the situation. In framing that plan, we have to examine our requirements as a nation and formulate our current needs. We then have to consider how far those needs can be met, in the light of the various limits set by our dependence upon overseas markets, our own capacity of production, the availability of manpower, and all the other factors which have to he taken into account.

BALANCE OF PAYMENTS

The very serious economic problems that confront us today fall into two broad groups; first, as to the balance of our external payments; and, second, as to the balance between our internal resources and the demands we place upon them. I will deal first with our external payments. This problem has already been very fully discussed, and I believe that today the whole country is becoming aware of the urgency of arriving at a balance of overseas payments, particularly with the dollar countries. The whole economic situation of 1948 will be dominated by our difficulty


in paying for the imports without which we can neither live nor produce. The hopes that we had a year ago have not materialised. Though, in 1947, we were able to import only 75 per cent. of the volume of imports in 1938, against the 80 to 85 per cent. for which we had hoped, rising prices of imports made the actual cost £124 million more than the forecast. We got considerably less than we hoped, and we paid much more for it than we calculated.

On the export side, the rise in volume was not as great as we had planned, largely due to the set-back in production in the early months of last year, though, with the increases in price, the value of our exports was only £75 million less than the estimate. Government expenditure abroad exceeded the expectation by £36 million, due to the continuing political uncertainties throughout the world, which made it impossible for us to reduce expenditure as rapidly as we had planned. Our earnings from invisibles were £90 million below the forecast for a variety of reasons. Our net shipping earnings were only £17 million. As we are importing less than before the war, if we had as large a shipping tonnage as pre-war we could have earned a net income several times the pre-war level of £20 million, but owing to our shipping losses, the amount of tonnage available for the profitable cross-trade routes is less than before the war. In addition, oversea expenses of British ships have gone up, as has the cost of repairs in foreign ports. This cannot be avoided, owing to the pressure on our own yards.

Our net income from investments was only £51 million in 1947, a decline of £24 million on 1946 and of no less than £124 million on 1938. We have had to continue selling some of our foreign assets. On the item of interest we have had to meet charges on our war-time borrowings of over £3,500 million, and in 1947 there were particularly heavy transfers of profits by foreign firms operating in this country. Our miscellaneous invisible items cover a large range of activities, involving both receipts and expenditure abroad. There was a large increase in most of this expenditure, much of which was of a productive character, largely connected with establishing new markets and business connections overseas as part of the export

drive, and, of course, also on the restoration of plant and other physical property damaged or neglected during the war.

All these adverse factors reflected themselves in the drain on our gold and dollar reserves, which stood out as the most obviously serious feature of the whole situation. The drain turned out to be more than 50 per cent. greater than our overall deficit, amounting to 1,023 million during the year. This matter has been fully explored on more than one occasion in the House, and I do not propose to deal with it again now.

EXTERNAL PROBLEMS

I turn, therefore, to the future—to the dimensions of our external problems in 1948, and the measures that we must take to keep the drain on our gold and dollar reserves under control. In the Survey are set out our prospective foreign receipts, both for the first six months of 1948 and for the year as a whole. The provisional export targets for 1948, which were given last September, have been exhaustively reviewed and revised in consultation with the industries concerned. In the result, we have slightly reduced the overall target for the end of 1948. We now aim to reach a level of 50 per cent. by volume above 1938 by the end of December next, instead of 60 per cent., which was the target fixed last September. If we build up to 150 per cent. by the end of the year, we estimate that that should give an average throughout the year, of 130 per cent. I do not think that this is an over-optimistic target, in view of the fact that we reached a level of 128 per cent. in January and 121 per cent. in the shorter month of February. But it will certainly require a sustained effort in many industries if we are to reach the overall 150 per cent. level by the end of this year. This is, of course, only an average figure made up of many different percentages, some smaller and some greater for the different industries.

On the side of invisible exports and imports, though we look for some small improvement, we cannot hope for any marked increase of net invisible earnings for some time to come. We estimate that in the first half year we shall receive, mainly from shipping and interest, £161 million against payments of £70 million for Government overseas expenditure and £140 million for other outgoings—giving a


net deficit on invisibles of £49 million for the half year and £80 million for the whole year.

IMPORT AND EXPORT POLICY

Imports for the first half year have been fixed at £792 million sterling. Our import programme has been built up on three principles—the first, to buy as little as possible from countries to whom we must pay dollars or gold; the second, to buy the minimum of food to maintain a healthy standard; and the third, to buy the minimum of raw materials to enable us to maintain a high level of industrial activity.

For the first six months of 1948, our import programme, so constructed, will result in an overall deficit on our balance of payments of at least £136 million. But, as some surpluses in sterling area countries cannot be used to offset other deficiencies, we estimate the drain on our reserves at over £220 million. Such a high rate of continuing drain on our reserves must give us all the gravest concern and it cannot be allowed to continue. The preservation of our reserves must be a cardinal principle of our planning. If, without further external aid, this drain were to continue, then our remaining reserves, which we estimate at a maximum of £450 million in June next, would be halved before the end of the year, and would be wholly exhausted in 1949.

During, this last week-end we have all seen that the Congress of the United States of America have passed the legislation for the European Recovery Programme and that the President has put his signature to it. That is an event of the most profound world significance. At this moment of doubt and difficulty in world affairs it comes as a light and hope to the freedom-loving peoples of the world. I could not let this occasion, on which we are dealing with matters so intimately affected by this action of the United States, pass without recording what is I am sure the deep and genuine gratitude of the whole Committee for what is being done and for the speeding and helpful way in which it has been done.

I need not emphasise what would have happened if no aid had been forthcoming from the United States. We should have been forced to cut down drastically our imports of food and raw materials, with

the gravest consequences to our standard of living, our employment, and our productive effort. United States aid cannot, however, add significantly to our reserves; it can help to reduce the drain upon them. We must, therefore, so manage our affairs that the drain on our reserves over the whole period of aid is brought as low as possible and virtually eliminated. We shall need all the reserves we can muster when Marshall Aid comes to an end. This means that we must control our imports, both in total amount and also in composition. We must make sure of our necessities and we shall not be able to indulge in luxuries. It means also that we must send more goods abroad even before satisfying our home market unless we can increase our production to meet both export and home demands.

EUROPEAN RECOVERY PLAN

As I have said on many occasions, the European Recovery Plan does not solve our problems or those of Western Europe. We are faced with the need to redress, within the next four years, the present gravely unbalanced position between the Western Hemisphere and Western Europe, so that at the end of the period we shall no longer need extraordinary outside help. It gives us time to build up our own economy and to co-operate with the participating countries for the same purpose. We shall have to devote this opportunity not to an early improvement of our standard of living, but to a strengthening of our physical resources, both in the United Kingdom, in Western Europe, and in those overseas countries whose economies are dependent upon, or linked with, the countries receiving Marshall Aid. As the Committee is aware, rapid progress has been made towards effective co-operation between the countries of Western Europe. This co-operation should not in any way prejudice the close working of our own country with the rest of the sterling area, and particularly the sterling area Dominions. It should, in fact, result in an extension of trade and commerce between Western Europe and the sterling area, to the benefit of both.

The strategy of the Government's plan for bringing about a better balance of payments between ourselves and the Western Hemisphere is set out in paragraphs 67 to 81 of the Economic Survey. The elements of those plans are, the diversion of exports to the dollar areas; the building


up of alternative sources of imports in non-dollar countries; close co-operation with the sterling area, and with the countries of Western Europe and their dependencies; and the restoration of conditions of multilateral trade over as wide an area as possible, with the eventual object of our being able to earn dollars or gold by our multilateral trade.

As part of these plans the Government are steadily pushing ahead the development of new sources of supply of raw materials and food in our overseas territories and throughout the sterling area. The groundnut scheme is one example. Co-operative developments of poultry farming in Eire, and of grain production and pig farming in Queensland, are examples of another type. Moreover, we have been able to make arrangements with some of the Western European countries, such as Denmark and Holland, by which we can increase our exports to them of products they particularly require and, in return, get larger supplies of food.

As we turn from our excessive dependence upon the Western Hemisphere to other sources of supply we must, of course, adjust our export plans both as to type and to destination. We must maintain a great degree of flexibility as these plans develop so that we can manufacture for the countries which send us additional supplies the goods they need, at the price and quality they can afford, in return for the imports which we need from them. This is not a matter which is capable of precise regulation by the Government. It must be left to close co-operation between the Government and industry, and producers will have to bear in mind the national interest, as indicated by the Government's plans, rather than their individual interest in seeking quick profits in easy markets.

In particular, of course, we must pay unremitting attention to the expansion of our exports to the dollar countries. Here again, I must repeat that we cannot choose the exports we will send. We must make what those countries are willing to buy from us. We must also expand our exports to South Africa, because that country is a source of gold for us. The increase of our exports to South Africa is one of the few ways of strengthening our reserves that still remain open to us. These changes in our

export policy and the development of production of non-dollar sources of supply obviously require time to be effective. The great act of the United States in bringing into operation the European Recovery Programme has given us and the Western European countries that time. Time, I would remind the Committee, is the scarcest commodity of all today, and we cannot afford to waste a moment of it.

INTERNAL SITUATION

I now turn to our internal economic situation and to the problem of securing a balance between our internal resources and the demands that are made upon them. The steps taken during the past year to strengthen our administrative machinery for handling this problem of planning the nation's resources have proved of toe greatest value. It is just about a year, the Committee will remember, since the Central Economic Planning staff came into being and the Economic Planning Board was set up. The latter body comprises representatives of industrial employers and trade unionists, together with the permanent heads of the principal Government Departments concerned with economic affairs. It has come to play a most effective part in helping to shape our economic policy. The achievement of a satisfactory internal balance is, of course, fundamental to a healthy economy. If demand is grossly excessive or, as has been the case too often in the past, grossly deficient, the economic system cannot work smoothly. In the particularly difficult situation in which we find ourselves today, our internal situation is bound to affect our external balance of payments. If inflationary tendencies are not controlled, exports will suffer from the too strong drag of the home market and the too high prices at which they will have to be offered overseas.

Excessive and uncontrolled demand also makes all planning a matter of extreme difficulty and renders it impossible to carry out the plans that are laid down—especially in such a democracy as ours, where we all desire to preserve a large measure of freedom of action for the individual. Today, all industries tend to show an abnormal appearance of prosperity, which exaggerates the real insufficiency of capacity and labour. Competition for scarce resources of all kinds exists, in which the most desirable


products from the national point of view are by no means necessarily successful, and there arises, as a result, a demand for increased controls over resources and investment because of the heavy pressure upon them.

The balancing of resources and needs is a continuing process and is one of great complexity. As a first stage, we need to achieve an over-all balance, measured in monetary units, but that alone is by no means sufficient. Needs vary in importance, absolutely and from time to time. Some are more essential for the good of the country; others are less so. We must see that the principle "First things first" is carried into effect; and it is not always easy to agree upon what the first things are, though we should, I am sure, all agree that the ultimate welfare and happiness of our own people is the first demand upon our resources.

MANPOWER AND PRODUCTION TARGETS

When formulating a plan which will give an over-all balance we must ask what it means in terms of manpower, and what changes it may involve in the distribution of manpower between different industries and different parts of the country. Raw materials, too, must be examined to see whether they can be made available and capital equipment for the necessary changes or expansions of production should be considered. Obviously, if any measure of success is to be achieved in carrying out the plan, the tasks set for different industries must be indicated. That has been done in the Survey for certain of our key industries, and targets have also been set for the labour force to show what changes in the distribution of manpower are desirable.

I would warn the Committee against the danger of developing plans which have no real relation to the actual facts of our present situation. Many such proposals have been put forward by armchair critics which would involve the movement of many hundreds of thousands of workers and their retraining in new skills, the use of raw materials that we cannot obtain and of capacity which does not exist and cannot be created. We are dealing primarily with production by human beings and they cannot, and must not, be dealt with as though they were pieces of machinery. We have to plan within the restrictions imposed by human habit and

custom as well as by raw materials and machine capacity.

It is because of the overriding importance of this human factor that we must give the producers the fullest information both as to our existing economic situation and as to the targets of production at which we are aiming. Unfortunately, it is not possible to set targets from the centre for all individual production units. A global target can be set for an industry as a whole but it is not possible in most cases to break that down owing to the very great variety of products and to the scarcity of raw materials and components that is bound to persist until we can afford to fill up all the pipelines of production.

CLAIMS ON NATIONAL INCOME

Turning to the actual working out of the plan for this year, I shall only have time today to deal with our internal position on very broad lines. There are three claims upon our available national resources—public consumption expenditure; capital development, both public and private; and private or personal consumption. The first of these includes the expenditure of Government Departments and of municipalities and thus comprises all those national activities which we have decided to undertake in common because we regard them as of importance. In 1938, public current expenditure on goods and services absorbed only about 16 per cent. of the net national income. In 1948, on the basis of the provisional estimates in the Survey, that figure will be 22 per cent. I will revert later to the main items of that expenditure.

The second claim on national resources is for the maintenance and improvement of our capital equipment. The Survey gives a forecast of £1,800 million gross capital development in this country. That is the figure resulting from the review of investment programmes carried out last autumn. It is by no means an excessive amount when we bear in mind the great arrears of replacement and maintenance during the war period. It is, indeed, quite obvious that if we could afford it and had the necessary materials, we ought to make even greater provision to develop to the full our export and import-saving potentialities, especially in the way of new inventions and processes which will give us competitive advantages in the future. The fact that we


are, I hope temporarily, unable to embark on more extensive schemes should not stop the preparation and planning of such schemes for future execution. Indeed, it may be an opportunity when engineers, architects and other professional persons are less heavily engaged on current work, to get ahead with those plans for the future.

When the two claims on national income that I have mentioned have been met, the remainder is available for personal consumption, and if inflationary pressure is to be avoided, personal consumption must be limited to this amount. Sufficient purchasing power must be with-held by taxation and by voluntary saving, to offset the purchasing power created by public expenditure and capital investment. The voluntary saving we need is private saving—that is, abstention from spending. In our situation today, the amount saved is more important than the particular security or institution in which the savings may be held; but money saved should be invested safely and kept unspent until it is wise to use it. I ask the National Savings Movement to take abstention from spending as its central theme for 1948, and I know that I can rely on their doing their utmost to increase private savings in that way.

INFLATIONARY PRESSURE

When we come to consider, as we must, the degree of inflationary pressure which today exists in our economy, we enter the most difficult field of economic analysis. It is not possible to give any accurate answer to the question: "How much inflation is there?" Nor is it easy to find remedies to deal with the situation. Indeed, inflationary pressure cannot be removed entirely by Governmental action unless we are to envisage a degree of economic control which is too rigid to be operated in a democracy, and would defeat our aim of getting away from detailed controls as rapidly as possible.

As to the facts, there can be no doubt that during last year many signs of inflationary pressure were to be observed. The demand for labour and materials was excessive throughout industry; costs, profits, and wages rose all through the year; the pressure of the black market continued in certain spheres, and we experienced great difficulty in devoting

sufficient of our resources to those types of production which were the most urgent for the country but not necessarily the most profitable or attractive to the producer.

And yet during 1947 we had an overseas deficit of £675 million, which meant that we had that extra volume of goods available to us in excess of our own production. In 1948, we plan to reduce that excess very substantially, depending to some extent upon the outcome of the European Recovery Programme. This means that there will be an increase of inflationary pressure to the extent of the difference between the amounts of the excess imports in the two years respectively. To set against this we have the reduction in capital investment consequent upon the plans of last autumn.

There will, therefore, almost certainly be a net increase in the inflationary tendencies this year as compared with last year. This problem of removing the inflationary pressure is not by any means the only one affecting the Budget, though it certainly is the most immediately important. There are two ways, as I have already stated, by which the inflationary pressure can be reduced—voluntary withholding of spending and Government taxation.

The mere fact that there is a Budget surplus, according to our traditional form of account, does not mean that we are thereby reducing inflationary pressure by the amount of that surplus. Last year there was, as the Committee knows, and as I will explain in detail in a few moments, a large Budget surplus, and it was in fact rather more than sufficient to secure that the money collected by taxation, with other Government revenue, defrayed all the Government's expenditure of every kind, omitting, of course, the Sinking Fund. I am not advancing any view that this is a test which ought necessarily to be applied year by year in judging the adequacy of the Budget. Much of the Government's capital investment which is of the highest priority should, in normal circumstances, properly be met from savings, that is to say, by borrowing rather than by taxation, but in this present inflationary condition a different and more stringent test is required.

Indeed, it is clear that despite the large surplus on last year's Budget inflationary pressure has not yet been decreased to


any marked extent. In view, therefore, of the factors I have mentioned, which will tend to increase inflationary pressure this year, we must secure an exceptionally large Budget surplus, big enough to yield a balance after all forms of Government expenditure have been met. We cannot, I think, rely upon any substantial increase in private savings; to do so would be highly speculative and quite unsafe, though we shall certainly hope that their volume will be at least maintained at last year's figures. On the other hand, we are certainly looking for an increase in production, through greater effort, higher efficiency, and continued mechanisation; and we want to do all we can to encourage that increase.

The Budget must, therefore, to fit in with the economic plan set out in the Survey, have two main objectives—first, to obtain, with an equitable distribution of the load of taxation, a real and substantial surplus, which more than provides for all Government expenditure, capital and current, and leaves over a balance, to be used to counter the inflationary pressure; and second, so to adjust taxation as to encourage production, by providing a better incentive to producers. This sets a difficult task, because, as I have said, no one can assess with any certainty the present degree of inflationary pressure or define with accuracy in which part of our economy it is strongest. My proposals, when I come to them, may be criticised as doing too much or too little.

We must always remember that one of the factors in inflation is the state of mind of the community as a whole, and if this altered we might find ourselves in a very changed situation. I hope that my proposals will prove sufficient, without weighing unduly heavily upon the taxpayers; but we must watch the situation carefully, and be ready to detect the moment when the inflationary pressure vanishes and gives place to deflationary tendencies; if such a thing should happen, we must then make a rapid readjustment of our economic and financial policies.

1947–48 OUT-TURN

I now come to a brief review of the results of the year which has just ended. These have more than justified the anticipations of my predecessor, a fact which, I am sure pleases him as much as it does me.

The Budget of April, 1947, increased taxation, on balance, by £53 million in a full year, and provided for a surplus of £270 million. In the autumn, as the Committee will remember, a Supplementary Budget was introduced, largely to stem the then increasing inflationary tendencies. This imposed further taxation, estimated to bring in an extra £198 million in a full year. On this basis the anticipated surplus for 1947–48 would have totalled £318 million. Instead, the realised surplus has amounted to £636 million. The size of this surplus is, to some extent, itself a measure of the inflationary situation; but nevertheless it shows that my predecessor was very wise in the measures that he took, even though they may not, in the event, have proved sufficient to achieve the whole of his purpose.

REVENUE

The total revenue for 1947–48 was £3,845 million, being £346 million more than the revised budget estimate of £3,499 million. Of this, Customs and Excise duties produced a total of £1,421 million, a surplus of £10 million over the revised estimate of £1,411 million. Beer, wines and spirits accounted for £376 million, a surplus of £8 million. Tobacco, too, unfortunately produced a surplus—I say "unfortunately" because it shows that consumption has not gone down as much as was hoped. The excess over the estimate of £525 million has been £43 million making a total of £568 million. Receipts from Purchase Tax, of £246 million, fell short of the amount expected by £35 million. The new duty of pool betting, which came into effect on 4th January, has brought in nearly £3¾ million as against an estimate of £3 million. Of this, roughly £2 million has come from the totalisators at dog races, and the balance from football pools.

Turning now to Inland Revenue receipts, these have produced a record surplus over estimates of £214 million that is £1,799 million compared to an estimate of £1,585 million, and this excess is derived from almost every head of revenue. Income Tax, at £1,190 million is £104 million up, again a reflection of the increased profits and earnings, evidence of the inflationary tendency in the previous year. The Surtax accounts for £91 million an excess of £11 million over the estimate. Death duties gave


£172 million, a surplus of £17 million, and E.P.T. and Profits Tax together £289 million, a surplus of £83 million. Stamp Duties alone at £56 million have fallen short of the estimate, by £1 million. The large surplus on the Income Tax is not attributable to the interest charge, for the rate of collection has actually fallen this year compared with last year; but in the case of Surtax and E.P.T. there has undoubtedly been an acceleration of collection due to the interest charge.

So far as non-tax revenue is concerned the main feature is the large excess over the estimate for surplus stores and receipts from the trading services of Government Departments. Surplus stores, at £197 million, are £102 million over the estimate, and net receipts from trading services, mainly realisations of stocks, at £101 million, exceeded the estimate by £46 million. Miscellaneous Receipts, which included the £112 million of unspent Votes of Credit from previous years, realised £278 million as against the estimate of £303 million. So much then for the Revenue for 1947–48, all of it showing the results of the inflationary tendencies which existed.

EXPENDITURE

I now turn to the Expenditure of 1947–48. Excluding £22 million for Sinking Funds, which, for technical reasons, appears in the Budget expenditure of last year, the total expenditure shows an excess of only £6 million over last April's estimate of £3,181 million, or less than one-fifth of 1 per cent. This is remarkable, since the rise in costs might well have caused an increase comparable to that in revenue, but it has not been so because of the constant effort to keep down expenditure. As a result of last autumn's decision to accelerate the run down in the Forces, there was a saving of £45 million on Defence expenditure at £854 million. On the side of Civil expenditure, however, there was an increase of £73 million over the estimate of £1,726 million, making £1,799 million in total. Supplementary Estimates of £240 million for the Civil and Revenue Departments were in large part offset by savings on other Votes.

These Supplementary Estimates covered a large number of items, and were almost

entirely due to special causes. The largest item was £142 million for the Ministry of Food, including the advance payment of £100 million to the Argentine. This will, of course, reduce substantially the expenditure which will have to be met this year.

Consolidated Fund services, at £556 million, were as estimated. The provision of £525 million for the service of the National Debt proved more than sufficient to cover the charge for interest and management, and a sum of £22 million was available to meet the Statutory Sinking Funds costing £17 million, and to leave £5 million for redemption of Floating Debt. Other Consolidated Fund services, at £31 million—mainly Northern Ireland's share of revenue—were as estimated.

ESTIMATED EXPENDITURE, 1948–49

I now come to the prospects for the year 1948–49 on the existing basis of taxation. I estimate expenditure for the year at £2,976 million. This is £205 million less than last April's estimate, and £233 less than the actual expenditure last year. This difference is the net result of substantial decreases and increases of individual items.

It is important that the Committee should realise that there are big and important savings forecast over a wide range of Government expenditure. The principal of these show the following savings by comparison with last year's estimates: National Debt (Interest Provision) million; Defence £206 million; War Pensions £7 million; Board of Trade commodity services million; Civil Defence and National Fire Service £17 million; Foreign Office (German Section) £55 million; Foreign and Imperial services—due to the run off of war terminal expenditure—£28 million; Fuel and Power (temporary services) £9 million; and Shipping and Inland Transport £25 million.

There are thus real and large savings, amounting in all to no less than £400 million, or nearly 13 per cent. as compared with last year's Estimates. Against these must be set the necessary increases of expenditure. These include £30 million for education, which no one will begrudge, and £14 million for housing. There are a number of miscellaneous increases, including, as a substantial item, the excess cost of the Post Office over


postal revenue, amounting to £8 million in all. But the big increase is the £143 million required for the new National Health Service. The total increases amount to about £195 million, or roughly half the total savings.

We have, I think, done everything practical to make as large a contribution as possible by economy of Government expenditure. We do not propose to cut the social services, as that is not in our view a fair or a desirable thing to do. We are proud of our record on the social services, and are anxious to improve on it. We must, however, have regard to the fact that, for the present, Defence expenditure is necessarily running at a high level—though it is coming down—and that we have already initiated, since the war, extended social services, which have not yet by any means reached the limits of their claims on our resources. We cannot, at the present time and in the present difficult situation, reduce materially the cost of rationing and other administrative controls. If any critics take the view that we should still further reduce Government expenditure, I hope they will be prepared to give details of the precise expenditure that they say we should reduce.

Taking the several heads of expenditure, I propose to provide £500 million for interest and management of the Debt. Miscellaneous Consolidated Fund services will take £34 million; £693 million is provided for Defence—the details of which have recently been fully discussed. Civil and Revenue Estimates require £1,749 million, a net increase of £23 million over last year's estimates, but a net decrease of £50 million on actual expenditure. All these items total, as I have said, £2,976 million. I have just given the figures for the Debt and Defence; the rest can be analysed as follows: £408 million is accounted for by grants to local services—the increase here, of £32 million, over the 1947–48 Estimate is mainly accounted for by the growth of expenditure on Education; National Health Services, Insurance, Old Age Pensions, Family Allowances, and other social services, require £409 million—this is an increase of £145 million over last year's Estimate, entirely due to the bringing into operation of the new National Health Service; War Pensions are £87 million; the Ministry of Food accounts for £320

million, as against £334 million in the original Estimate last year, but here it must be borne in mind that the special item of £100 million for the Argentine came fortuitously into last year's accounts.

Food subsidies are estimated, in round figures, to amount to £400 million for the year. We have decided to continue these subsidies at this level, because we are convinced that though, in theory, they may be inflationary, in practice, they have, in the particular circumstances of today, precisely the opposite effect, since they restrain the demands, which would otherwise inevitably arise, for increased personal incomes to meet the increased cost of living. It must be remembered, in any consideration of cost of living figures, especially in comparison with other countries, that we are providing this sum annually out of taxation, which is equivalent to something like 12s. to 14s. a week for every family in the country, in addition to at least a like sum by way of social services.

If we add to the figures I have given £29 million for the cost of tax collection and £11 million for the excess of Post Office cost over revenue, the figures so far mentioned in this analysis add up to £2,457 million. This leaves £519 million of the total Budget Expenditure of £2,976 million still to be explained. The comparable figure for the 1947–8 estimate was £661 million, so that there is a net saving on these items of £142 million or 21½ per cent. over this group. An analysis of this total of £519 million will be found in Tables VIII (c) and (d) of the Financial Statement. It is too long to go into in detail at present. It covers a very wide range of services, some of them still affected by war circumstances, and in these we can look for further reductions. They will all continue to receive close examination throughout the year, to see what further economies can be made, but not at the cost of reducing the value of the social services.

REVENUE FROM EXISTING TAXES, 1948–49

I now come to the estimate of revenue for 1948–49, on the existing basis of taxation. During 1948–49, Customs and Excise receipts will show the full effect of the changes in taxation introduced since last April, including the tobacco concession to


the old age pensioners, which was introduced in October last. Beer, and the rest of the alcoholic drinks, are expected to bring in £400 million, tobacco £560 million, and Purchase Tax £300 million. These, together with an estimated £240 million from other Customs and Excise duties, bring the total estimated revenue from this branch to £1,500 million.

So far as the Inland Revenue is concerned, we can look for a further expansion this year. There has been a considerable expansion of profits in 1947, and it is those profits which will come under charge to Income Tax this year. There was also a considerable rise in wages and salaries last autumn, with the result that total earnings will be running at a higher level this year than they were last year. Even allowing for the increased reliefs which were given by last year's Budget, which will operate fully this year, I anticipate a yield of £1,395 million from Income Tax this year, compared with £1,190 million last year. Last year's high Surtax yield will, I hope, be maintained and I estimate for £90 million. I expect 160 million from Death Duties, and £55 million from stamps. E.P.T. will show a further substantial fall—it now being over a year since the tax was taken off—but we can reckon on a full year's yield of the increased Profits Tax, so that the two together are estimated to yield £250 million this year. Adding £1 million for miscellaneous duties gives a total from Inland Revenue of £1,951 million, or an increase on last year's out-turn of £152 million. Since the present Government took office, we have reduced Income Tax by 1s. in the £, substantially increased personal allowances and reliefs, and abolished E.P.T.; and yet the total yield of Inland Revenue duties is now not far short of the all time peak of £2,043 million, reached in 1945–46.

Coming now to other revenue, I put the Motor Duty at £50 million. From surplus stores I expect to get £102 million, as against the estimate of £95 million last year. Trading services should realise £57 million, against last year's estimate of £55 million; £12 million should come from broadcasting licences and Crown Lands, £14 million from sundry loans, and £68 million from miscellaneous receipts—against the exceptional figure of £270 million estimated, and £243 million re-

ceived last year. The total of these items is £303 million. To sum up, therefore, the total revenue on the existing basis of taxation is estimated at £3,754 million as against an expenditure of £2,976 million, or a prospective surplus, on the traditional basis, of £778 million.

BUDGET SURPLUS

I propose to take powers this year similar to those taken last year, to apply the Budget surplus, as it accrues, to the reduction of maturing debt. No market operations will be required this year to deal with maturities of long-term Government debt. On the other hand, we shall, as usual, be borrowing during the year to meet certain payments of a capital or of a non-recurrent nature, which are charged on the Consolidated Fund and are dealt with "below the line" in the Exchequer accounts. These items are partly to liquidate war commitments, and partly to provide new capital investment.

Out of a total expenditure "below the line" in 1947–48 of £711 million gross and £692 million net, £280 million was for war damage payments; £56 million for Post-War Credits for the elderly; £28 million for E.P.T. refunds; new capital developments—coal, housing, cotton and overseas resources development—took a net sum of £103 million and advances to the Local Loans Fund £225 million net. This year, the expenditure on "below the line" items will be less. I put the net total at £473 million, of which £140 million is for war damage; £20 million for Post-War Credits; £20 million for E.P.T. refunds; £59 million for Exchequer advances for new capital development; and £234 million for loans to local authorities. Though the main transport and electricity stock operations have now gone through, there will be some further issues, this year, by, or on behalf of, the public boards. Except in the case of coal, these will not form part of the National Debt, but they will attract a Treasury guarantee, so as to make full use of the credit of the State.

METHOD OF PRESENTATION OF BUDGET

The figures I have given for the realised surplus in 1947–48, and for the expected surplus on the existing basis of taxation in 1948–49, are on the conventional basis, that is they relate to the


position on that part of the Exchequer balance sheet which is commonly spoken of as "above the line." This basis has been criticised in the past, on the ground that "the line" does not divide capital items on the one side from revenue items on the other. Originally, the criticism was that capital payments were being charged to the revenue account, so that the real surplus available for tax reductions was larger than appeared in the Budget. Latterly, it has been criticised on the opposite ground, that payments which should be charged to the revenue account were being met by borrowing, and that capital receipts were being credited to the revenue account, with the result that the surplus shown in the budget was greater than the true surplus of the year. It was also argued that there was a number of non-recurrent items in the Budget, arising mainly out of the aftermath of the war, more of them occurring on the receipts side than on the payments side, and that therefore the surplus was itself non-recurrent and would not be maintainable.

These opposing lines of criticism open up a subject of great interest, and, especially at the present time, of considerable importance; and I would, therefore, like to express a layman's view on the issues presented. It is not profitable, now that war terminal items on both sides have diminished considerably, to pursue arguments based simply on recurrence or non-recurrence of such items. Items must be shown in full in the accounts, whether or not they will recur in a subsequent year. They are no less real because they are non-recurrent. Moreover, there is no clear frontier between entirely non-recurrent items and those which may take some years to decline to nothing. Indeed, the Committee may hope that some of the present rates of taxation may have some element of non-recurrence in them; but none of us can say which items may diminish or by how much.

As I see it, what is really important in the long run is that we should study whether there will be sufficient money available in the Budget surplus, taken together with savings, to finance the nation's investment programme. We must, therefore, examine what is the true surplus or deficit on the transactions of the Government of a revenue character. To the extent of such surplus or deficit,

there will be a correspondingly less or greater need to have recourse to our savings in order to finance our investment programme.

I have had a rough analysis made on these lines of the final figure for 1947–48, which is set out on pages 4 and 5 of 1he Blue Paper to enable hon. Members to follow the matter more easily. The proceeds of taxation are all in the revenue account. There are also some miscellaneous receipts (broadcasting Licences, Crown Lands, etc.) which are clearly revenue. On the other hand, receipts from the sale of surplus stores—£197 million, capital repayments from trading services—£101 million, and repayments of loans, etc.—£85 million, are put to capital, and the surrender to the Exchequer of balances on war time accounts—£112 million, is omitted from revenue account, as an internal transaction of the Government.

On the expenditure side, sinking fund, loans to allies, etc., are excluded from the revenue account, together with the advance payment to the Argentine, and certain payments which are the cost of creating physical assets—including the net value of changes in food stocks but not including such items as ships of war and aeroplanes. The total so transferred to capital account is about £211 million. But Post-War Credits—£56 million—are included in the revenue account. War damage and Excess Profits Tax refunds are left in the capital account. On this basis, a real surplus of receipts over payments on revenue account for 1947–48 is shown, at about £338 million.

Hon. Members may have noticed that, on page 29 of the National Income White Paper, a deficit of £537 million on the current account of the Central Government appears, and they may wonder how this can be reconciled with the surplus of £338 million which I have just mentioned. The difference is almost wholly due to two large factors. First, I have taken war damage payments and E.P.T. refunds into the capital account, whereas the White Paper treats them in the revenue account of the Central Government. This accounts for £306 million of the difference. Second, the White Paper covers the calendar year 1947, whereas the Budget figures cover the financial year 1947–48. The big increases of taxation and the big reductions of expenditure, made between


the first quarter of 1947 and the first quarter of 1948, account for over £500 million in round figures. The anticipated real surplus in 1948–49 on the existing basis of taxation would, on the basis which I described a moment or two ago, amount to about £598 million.

These figures that I am giving are not intended as a criticism of the form of the present Budget statement, but rather as an experimental analysis of receipts and expenditure, which will, I hope, lead to instructed discussion in financial and statistical circles, which may enable us, at some future date, to work out a better form for our Budget statements—if it can be substantiated that there is a better form.

PROSPECTIVE SURPLUS

When we examine these figures from the point of view of their effect on the inflationary tendencies, we have to look at them in relation to the economic situation as a whole. The expenditure of the Government on capital account puts money into circulation and creates purchasing power just as much as does the expenditure on revenue account, and has to be offset by private saving, or by the revenue surplus. When we make this examination, we see that, in 1947–48, the Government put back into circulation, in one way or another, all the money they withdrew by taxation. They paid for their own capital expenditure, but there was no surplus over to help to stem the inflationary tendencies in the rest of the economic system. It is at such an overall and absolute surplus that we must aim this year, and it must be substantial enough to make an impact on the situation. Especially in view of the reduction in our external deficit, I believe that we should aim at such a true overall surplus of about £300 million.

Taking the figures which I have already given, on the basis of present taxation the revenue surplus for 1948–49 would be £598 million; but the net capital expenditure by the Government would amount to £279 million, so that there would remain an absolute, overall surplus of about £319 million, which could be used to counter the inflationary tendencies by relieving the Government of the necessity to renew borrowings to that extent.

The question is whether this is a sufficiently large sum for that purpose. In

my view, it is just about adequate, so that, if we are to do anything to increase incentives by adjustment of taxation, we shall also have to find fresh sources of taxation to set off against the remissions which we make. It is only in this way that we can provide what I regard as an exceptional surplus to deal with the inflationary situation. We are, indeed, in a very special and critical situation, as was shown by the White Paper upon Personal Incomes, Costs and Prices; and we must take exceptional measures to counter the situation.

PRICES, PROFITS AND PERSONAL INCOMES

I should, I think, at this stage, say a word here on the subject of prices, profits and personal incomes before passing on to my proposals for taxation for this year. Many people have commented upon the fact that I have attempted to get voluntary agreement to the limitation of profits, the stabilisation or decrease in prices, and the avoidance of any general increase in wages and salaries. I am not the least surprised at this criticism of what I regard as a sensible, democratic approach to a very difficult and complex economic problem.

We start with the proposition, which is almost universally accepted, that the fixation of wages, salaries, and conditions of work, should be left to voluntary agreement between the representative bodies of employers and workers. To those who have this duty we have appealed to pay full regard to the urgent national needs of the hour. There has been no fixing of any ceiling, but we have stated that the country cannot now afford any general rise in personal incomes of any sort. We have stated no objection to adjustments as set out in the White Paper; indeed, we have envisaged the need for such adjustments in special cases. We are much encouraged in this policy by the support that the Trades Union Congress has given to our appeal.

When it comes to profits, we have taken steps by taxation to limit the amount of profits that can be distributed to shareholders. Roughly speaking, 60 per cent. of distributed profits now has to be paid in taxation through Income Tax and Profits Tax, and it is only the remaining 40 per cent. that can be distributed as personal incomes. At the same time, we


have appealed to the directors of companies not to increase the distribution of profits this year, and to that appeal there has already been a wide response. I propose to leave the matter there until next year, by which time we shall see whether the promises not to increase the distribution of profits have been fully carried out.

So far as prices are concerned, we recognise that increases which have already occurred and may yet occur, in the prices of primary commodities will make it impossible to prevent a rise in some prices even when full advantage is taken of the economies which can be made by greater efficiency and of the maximum reduction of profits and of margins for distribution. It is important that, when the people are being asked to forego increases in their personal incomes there should be, so far as possible, stabilisation of prices over the whole field, whether covered by price control or not. We have, therefore, appealed to the trading community to co-operate in effecting a price standstill and in making reductions in price wherever possible, to offset the inevitable price increases to which I have referred.

Here again, there has been a marked response, and already many reductions are in operation. The Co-operative Societies, in particular, have announced a most valuable range of price reductions in essential foodstuffs, and we hope that this will stimulate others to follow this example. I hope, in particular, for price reductions from those efficient manufacturers and distributors who are able to produce or distribute at prices below the statutory ceiling prices. I am sure hon. Members opposite will be particularly pleased with this revival of competition in prices.

As the Committee knows, the President of the Board of Trade is making orders—to come into effect towards the end of this month—putting a statutory ceiling on the prices of consumer goods in respect of which the present price control is not tight enough, and he and the other Ministers concerned will be discussing margins with distributors, with a view to reductions wherever possible. Apart from this and the normal processes of price control, I do not propose any special legislative steps as regards personal incomes, prices or profits, other than the usual taxation provisions.

MINOR TAX CHANGES

Perhaps it would be convenient, before I come to the main items of tax changes in the Budget, to deal first with certain minor matters. There will be a few alterations on the Customs side, arising out of the trade agreements which we entered into at Geneva last autumn. Most of the changes we then undertook to make were, in fact, brought into operation by Treasury Order as from 1st January last. A few cases must, however, be dealt with in the Finance Bill. These relate to a very mixed bag—motor cycles, agricultural tractors, prunes, rice, patent leather, and certain silk and artificial silk manufactures. On most of these matters Budget Resolutions will also be required. These will implement undertakings already published in respect of these goods. Overall, they will involve a very small loss of revenue of about £100,000 in a full year.

Next, I propose to abolish the Excise Duty of 8d. a gallon on unsweetened table waters. This, which is mainly a tax on soda water, which I do not drink, now yields only about £150,000 a year, and is not worth the trouble and manpower necessary for its collection. It will be repealed as from 1st May, and the loss this year will be about £100,000. At any rate, we think that very little soda water is drunk neat in this country today. I hope that nobody as a result of this will accuse me of encouraging inflationary tendencies.

The legislation governing the Key Industry Duties falls to be renewed this year, and I propose to extend it for another three years. Also, the provision for the stabilisation of the margin of Imperial Preference on sugar expires next August. These margins have been fixed at their present levels since 1926, and I propose to extend the period of stabilisation for a further four years.

On the Inland Revenue side, there will be minor changes for the simplification of P.A.Y.E. and for the assessment of farming profits. As regards P.A.Y.E., I propose to make statutory the administrative arrangement, sanctioned by my predecessor, for the abandonment of the checkup assessment. Where the taxpayer's coding is correct and tax has been correctly deducted in accordance with that coding, the liability will be regarded as finally discharged, and no assessment will


be made in respect of any slight underpayment that may result. There will also be a change in the measure of relief in respect of life insurance premiums, designed to permit the relief to be accurately allowed for in the coding.

So far as farmers are concerned, it is proposed that, with effect from 1949–50, those farmers who still remain assessed under Schedule B on the basis of three times the annual value of the lands they occupy should thereafter be assessed under Schedule D on their profits. With the present system of guaranteed prices, there is no reason why farmers should not—in common with everyone else—pay tax on their true income. Indeed it is a matter of importance both for the nation and for the farmers that accurate and proper accounts of their activities should be available in connection with the review of costs undertaken by the independent economists for the fixation of prices under Part I of the Agriculture Act, 1947, and we believe that this alteration in the method of taxation will help to produce such accounts.

There is one other minor matter I propose to deal with in the Finance Bill, for which a Resolution will also be required, and that is to clarify the law as regards the taxation of removable containers on goods vehicles.

CUSTOMS AND EXCISE

I now pass to the major proposals for the adjustment of taxation to the special needs of this year. I may perhaps repeat these needs—to give an excess of Government revenue over every kind of Government expenditure, so that that excess can be used to counter the inflationary tendencies; and to provide the maximum incentive we can afford for greater production. The proposals that I am making must be considered as a balanced whole, and must not be taken one by one in isolation. They are intended, as a whole, to produce a certain effect upon our economic situation, and to fit in with the necessities disclosed by the Economic Survey.

ALCOHOL

First, then, I turn to Customs and Excise, and in this section I must raise a substantially increased revenue.

I propose, therefore, to introduce a further increase in the rates of beer duty, equivalent to 1d. a pint on beer of average

strength. This will entail raising the duties by 8½d. per barrel for each degree of strength, subject, as at present, to a minimum on beer of a gravity up to 1027 degrees.

There will be a corresponding increase of £1 per proof gallon in the duties on whisky, rum, and other spirits. This increase will be the equivalent of 2s. 4d. a bottle on whisky of the usual strength of 30 degrees under proof. The increase will not, however, apply to perfumed spirits, a very different thing from potable spirits. We have, in fact, agreed with France, as part of the Geneva arrangements, to make certain reductions of duty in respect of the very small quantities of perfumed spirits which are allowed to be imported. These reductions will be incorporated in the new scales.

In regard to wine, the changes which I propose will have two objectives. In the first place, there will be a general increase of the rates of duty, corresponding to the rates of increase for beer and spirits. For heavy wines of foreign origin, the increase will be the equivalent of 1s. a bottle, and for light wines, 6d. The Empire wine countries have, however, made out what seems to me a good case that, although the margin of preference on their heavy wines has been continued at the amount of 4s. a gallon—at which it stood before the war—this difference has become proportionately of much less value in relation to the present rates of duty. We therefore agreed, at Geneva, that this margin should be raised to 10s. a gallon. The practical effect of this is that the rates on heavy wines from South Africa, Australia and other Empire countries will remain unchanged at the present level.

In addition, we have undertaken with France to make certain reductions in the rates of surcharge on sparkling wines and on still wines imported in bottle. These concessions, details of which have already been published, will be brought into effect in the new scale of rates that I now propose. There will be corresponding changes in the rates on British wines, equivalent to an extra 6d. a bottle on light wines, and 1s. a bottle on the heavier types. In the Debate on the November Finance Bill, my right hon. Friend the Financial Secretary undertook to give sympathetic consideration to a proposal to allow the British wine industry to raise the strength


of their product in bond with duty-free spirits, in the same way that importers of foreign and Empire wines have been able to do for many years. I have decided that it would be reasonable to meet this request of the industry, and a provision to that effect will be included in the Finance Bill. Further details of these proposals will be found in the usual White Paper. The new rates of duty will come into operation from tomorrow, and are estimated to yield additional revenue of £45 million in a full year and £41 million in 1948–49.

TOBACCO

As the Committee is aware, the increases in Tobacco Duty last year were made with a view to producing a substantial fall in consumption, put by my predecessor as at least 25 per cent. This reduction in consumption has not been fully realised, and it is as necessary as ever that we should keep down the consumption of this imported article. It would not be advisable, I feel, to make another very large increase in the duty; but it is necessary to bring to smokers' attention once again the need for economising in tobacco, and I therefore propose to raise the Duties on leaf tobacco by 3s. 4d. a lb. and to make corresponding adjustments in the rates chargeable on imports of cigars, cigarettes, and other manufactured tobacco.

This will mean an increase in the price of cigarettes at present sold at 3s. 4d. for 20, to 3s. 6d. for 20. Those now sold at 2s. 6d. for 20 will go up to 2s. 7d. It is estimated that this increase in duty will yield £20 million in a full year and £19½ million this year. The new rates of duty will come into effect as from tomorrow. In the absence of special action, this increase in the duty would give the tobacco manufacturers a substantial and fortuitous profit. It would not be right that, in present circumstances, they should retain this, and I therefore propose to place a corresponding Excise Duty on stock held by manufacturers on Budget day. I am considering what arrangements shall be made to extend the scheme for relief of habitual smokers amongst Old Age Pensioners to take account of the present increases.

BETTING

I now come to the question of Betting Duty. The collection of this duty has

proved easy and profitable, and I have come to the conclusion that, in present circumstances, football and similar pools can bear a higher rate of duty. I propose, therefore, to increase the present rate of 10 per cent. to 20 per cent. The new rate will apply to all such pools in respect of events taking place after today. There is one small loophole in this duly which I propose to close. Some operators in this field have discovered that the existing definition of pool betting, by which winnings are related to the total amount staked, does not cover the case in which a fixed amount is offered as the prize money, to be divided amongst the winners without reference to the total amount staked. The definition of pool betting will be extended to cover these cases. The tax on bets with the totalisators at dog tracks bears more heavily than that on the pools, because of the mote rapid turnover of money from race to race. I do not, therefore, propose to increase the tax on totalisator bets.

On the occasion of the last Budget, there was a considerable volume of opinion, on all sides of the House, that the Duty should be extended to all other forms of betting. It will, however, be generally agreed that a comprehensive scheme to cover all betting—on and off the course—which is equitable, cannot be introduced without radical amendment of the gambling laws, and it is not my intention to introduce such a scheme now.

The question of the amendment of these laws, which I am at present considering with my right hon. Friend the Home Secretary, raises matters on which there are deep differences of opinion amongst the public. There is, however, the special case of bookmakers operating on the dog courses, who are competing with the totalisators. I propose that these bookmakers shall pay a graduated licence duty for each meeting, and that the occupier of the racecourse shall be responsible for collecting the duty from the bookmaker and paying it over to the Customs.

The licence duties for each meeting for courses where there are three betting enclosures will be £6, £18 and £48; for two enclosures, £6 and £24; and, for courses with only one enclosure, £12. These rates will apply to the normal eight-race meeting, and will be subject to adjustment up or down, according to the number of races run. The new licence duties will come


into operation from the tenth day after the Finance Bill receives the Royal Assent. This will allow time for the issue of licences, notices, and instructions, to all concerned. The changes that I have mentioned in the betting taxes will raise the total yield of the betting duties by £11 million in a full year and by £8½ million in 1948–49.

PURCHASE TAX

The next item is the difficult and complex one of the Purchase Tax. Almost my first experience of my present office was the widespread demand for a comprehensive review of the Purchase Tax. The criticisms of the present tax fall under three main heads. First, it is said that the tax classification is unduly complicated, and gives rise to many anomalies; second, that the tax falls unduly hardly on necessities, and therefore has an inflationary effect; and, third, that the legal provisions governing the rate of tax are difficult to follow, being scattered among a number of schedules to different Finance Acts. There is a good deal, I think, in all these criticisms, and, anyway, I am sure that it is necessary to re-arrange the whole incidence of the tax and to make it more easily intelligible.

I must, however, continue to look to the tax for a very substantial revenue, especially in existing circumstances. Yet I am, at the same time, most anxious to make some contribution to a lowering of prices, and, what is more important still, to provide some relief for the hard-pressed housewife, who feels the incidence of this tax very keenly. We must certainly continue the exemption of those broad classes of goods which must be regarded as absolute essentials for the individual and for the maintenance of the home.

I accordingly propose to continue the exemption of all food and fuel, and of utility clothing, with one exception to which I will refer in a moment. Similarly, utility furniture, sheets, towels, pillow cases and so on, cups and saucers, saucepans, buckets and so forth, and the various kinds of household brooms, brushes, soap, and similar cleaning material, will all continue to be exempt. One of the great complexities of the present tax is the diversity of rates in force—33⅓ per cent., 50 per cent., 66⅔ per cent., 75 per cent. and 125 per cent. I propose, therefore, to reclassify the

whole field into four categories—exempt, 33⅓ per cent., 66⅔ per cent., and 100 per cent., all percentages being on the wholesale value.

Experience has shown that above 100 per cent. evasion is widespread, and goods are driven on to a black market. The goods to fall within the new 100 per cent. category will be substantially those hitherto in the 125 per cent. and 75 per cent. lists. The rest of the field of chargeable goods will be divided between the 33⅓ per cent. and 66⅔ per cent. rates. Practically all the articles at present charged at 33⅓ per cent. will remain in that category, and I shall add to that list one or two articles, at present exempt, which for special reasons can be moved up. Children's non-utility clothing was made tax free before utility clothing was being produced for children, and it is right that, as with other garments, the exemption should be limited to the utility types. I, therefore, propose to put up children's non-utility clothing into the 33⅓ per cent. class, and also utility fully-fashioned stockings, which can bear the lowest rate of tax; this may, indeed, make it a little easier to meet the demand. Refrigerators will also be moved up to the 33⅓ per cent. class.

The main reductions will come about by moving down a large range of articles from the present 50 per cent. class to the 33⅓ per cent. rate. The principal classes of goods that will thus benefit by a reduction of tax are: Headgear, gloves and haberdashery; carpets, rugs and matting; lighting fittings and hand lamps; vacuum cleaners, carpet sweepers, washing machines, sewing machines and ironing boards; knives, forks and spoons; stationery; toilet and shaving soaps; razors and razor blades; tooth brushes and tooth paste; and toys and sports goods. The rest of the group at present chargeable at 50 per cent. will go up to 66⅔ per cent. This list will include cloth, excluding utility kinds; non-utility furniture and soft-furnishings; clocks, watches and radio sets; trunks, etc., except the leather ones chargeable at the top rate; cameras and photographic films; smokers' requisites; and musical instruments. Organs, however, I propose to add to the list of exemptions, in view of the fact that the tax falls chiefly upon church finances.

All the existing schedules of goods liable to Purchase Tax will be repealed


and the new list of chargeable articles at the respective rates will be enacted in a new form, which I am certain will prove far more convenient and comprehensible. Fuller particulars of the new scheme will be found in the White Paper, which will be available in the Vote Office when I sit down.

The tax in its new form will apply to goods delivered by registered manufacturers and wholesalers on and after Friday next, 9th April, and there should, therefore, be a quick reduction in the price of a number of articles corresponding with the reduction in tax. The total effect of these changes in the field of Purchase Tax will be to reduce the yield by a net amount estimated at £24 million for a full year and £18 million in 1948–49.

I should add that I am now working out, with my right hon. Friend the Minister of Health, proposals for widening the scope of the present exemption for essential medicines. Hitherto, the exempt list has been restricted to certain more costly preparations; but we propose to extend it to include a much wider range of non-proprietary articles. A provision with this object will be included in the Finance Bill, and a Resolution is being tabled for this purpose. In the figures that I have given, allowance has been made for this extended exemption of medicines.

On balance, therefore, this rearrangement of the Purchase Tax will make a contribution at the rate of £24 million a year to price reduction. The actual reductions, in the range of necessary goods like carpets, cutlery, haberdashery and so on, will amount to about £50 million, but will be offset by some increases in tax on less necessary articles. This will, I hope, be some encouragement to the housewife, who is such an essential factor in creating the necessary morale for high industrial production. I hope, too, that the reduction on stationery of all kinds will be of help to the educational world. The £50 million reductions of tax should mean a price reduction of approaching 10 per cent. spread over rather more than £500 million worth of goods this year.

EXPENSES ALLOWANCES

The first matter with which I want to deal on the Inland Revenue side is one

which has been much complained of, and quite rightly too; that is the extravagant way in which, in recent years, companies have made expenses allowances to their directors and senior officials. It is perfectly legitimate, of course, to deduct, by way of expenses, a reasonable expenditure upon necessary entertainment; but this right has been noticeably abused by extension to cover the ordinary living expenses of many persons, who are either directors or employees of the companies. This must be brought to an end. Under the existing law, it falls upon the Inland Revenue authorities to prove that the payments are not necessary business expenses, and because of the difficulty of substantiating the case it often happens that these payments go untaxed. The majority opinion in industry condemns this practice, but there can be no doubt that many individuals are circumventing the law, and are succeeding in maintaining a lavish standard of living at the cost of the taxpayer.

I propose, therefore, with immediate effect, that all expenses allowances given to directors and others, and all disbursements for their benefit, shall be assessed on the recipient of the benefits under Schedule E, and it will then be incumbent on the recipient, if he maintains that any part of his expenditure has been incurred for business purposes, to prove, in the words of the general Schedule E rule, that this expenditure has been "wholly, exclusively, and necessarily" incurred in the performance of his duties. There is no intention to interfere with legitimate expenditure so incurred, but I hope that these new provisions will put a stop to the present bad practices. Since the proposal is designed to check an abuse, I do not anticipate any substantial new revenue from it. I put it at £250,000 for a complete year, and 150,000 for this year.

Before I leave this subject, I will mention one other device which people may be tempted to adopt. That is to dress up what really is remuneration in a non-taxable capital form; for instance, as compensation for loss of office, or as payment in consideration of a restrictive covenant on an individual's employment. Such devices, by which a man aims to evade paying his fair share of Income Tax, are intolerable in our present state of affairs and I must give warning that the position


Will be closely watched, and that the Government will not hesitate to propose legislation, with retrospective effect, to deal with any such devices.

SPECIAL CONTRIBUTION

So far, I have indicated a net increase in revenue for this year of some £51 million, but I have to bear in mind that some moderate incentives are required to encourage production, and that we must have a sufficient absolute excess of revenue over all payments out to enable us to diminish the inflationary pressure. It is, therefore, necessary, as a special measure, to increase the revenue on the Inland Revenue side. Various attractive suggestions have been forward for a capital levy, but from the administrative point of view, a capital levy—in the ordinary sense of those words—is impracticable at the present time. It would be impossible to effect the valuation of all the capital assets in the country without a very large increase in the staff of valuers; and that staff is already very short for the jobs that it has got to do. Moreover, the assessment and collection would take years, and could be of no immediate value to the Revenue.

On the other hand, it is undoubtedly right—and I am sure the Committee will agree with me in this—that those who possess large capital assets should make some contribution to help the country in this emergency. Some of them are now spending those assets in a manner that is distinctly inflationary in its effect. It has, of course, long been the practice to tax capital by means of Death Duties, which, together with Surtax and the higher ranges of Income Tax, represent the taxation of wealth following the general principle of fixing taxation in accordance with the ability to pay.

I now propose to make a special once-for-all levy, which will be largely payable out of capital, and will be based on the investment income of individuals for the year 1947–48. Investment income for this purpose will include all rents, dividends, interest, and other such payments. A contribution arrived at in this way avoids all the difficulties of valuation which beset a capital levy. It will cover all forms of income-producing capital, but not other forms. This is essential, if it is to avoid the delay and difficulties of a capital valuation.

The contribution will apply only where the taxpayer's total income from all sources exceeds £2,000, and, in addition, his investment income exceeds £250. Thus, no persons of moderate means will be liable, and no purely earned income will be liable, however large it may be. The scale of duty will appear in full in the Financial Statement, but it will begin at 2S. in the pound on the slice of investment income between £250 and £500, rising to a maximum of 10s. in the pound on investment income exceeding £5,000. Provided that the total income exceeds £2,000, as I have said, a person with an investment income of £500 will pay only £25; with an investment income of £2,000 the charge will be £425; and a person with an investment income of £5,000 will pay £1,625. There will be a marginal relief to ensure that the contribution payable does not exceed the excess of the total income over £2,000.

As this contribution is something we are specially asking for to meet an internal emergency, it will not fall on capital held in this country by people who are neither resident nor domiciled here. Persons domiciled abroad, but resident in this country for the year 1947–48, will be liable to the special contribution if they have been ordinarily resident in this country for the last 10 years. I would emphasise that this is not an annual tax, but a special contribution for a special purpose. I recognise fully that regular taxation of this character would have a marked dis-incentive effect on saving, which is certainly not what we want.

Necessarily, the administration of this contribution will be spread over some period of time—but it is of great importance that it should be paid promptly, so that its full effect can be felt as soon as possible. The due date for payment will be 1st January next, when the Surtax for 1947–48 becomes due; but I would appeal to everyone liable to this contribution to make a payment on account to the Inland Revenue, in advance of assessment. I propose, in order to encourage this prepayment, that advance payments should carry a discount of 2 per cent. net per annum up to the 1st January, 1949. Interest will be charged on payments in arrear.

The contribution is considered to be a charge on capital, and in many cases there will, in fact, be no other way of


paying it. Provision will, therefore, be made to enable the contribution charged to be recovered from capital, where the income and capital are in different hands. For example, in the case of trust income, there will be a provision enabling the contribution to be paid out of the capital of the trust. The full yield of the contribution will be £105 million, of which I have written £50 million into the Estimates for this year—though I much hope that, with the co-operation of those liable and the advantages of the discount, we shall be able to collect considerably more than that before the end of the year.

ENTERTAINMENTS DUTY

I now come to the question of incentives, and how much of the increased surplus we can spare for this purpose. Before coming to the Inland Revenue reliefs, I will deal shortly with one or two other matters.

I propose to make certain changes in the incidence of the Entertainments Duty. Since 1935, a distinction has been drawn between the living theatre and other kinds of entertainment; and in 1946, sports—other than racing—were added to the list of entertainments which were eligible for the reduced scale of tax. I believe that we should encourage these forms of living entertainment, particularly the theatre; arid I propose, therefore, to increase the measure of relief from duty which they already enjoy. For theatres, concerts, circuses, sports, and other entertainments which at present qualify for the reduced rates, payments for admission up to 1s. will be exempt from duty, and the duty on payments above that amount will be approximately one-half the present rates.

I am also anxious, for the sake of our agricultural communities, to encourage all types of entertainment in the rural areas, including such things as cinema shows. I propose, therefore, to grant complete exemption from duty in the case of all entertainments in buildings situated in places in the rural areas, where the population does not exceed 2,000 and the seating capacity of the building does not exceed 200. I hope that this will enable more entertainment to be taken to the rural areas, and that we may thus help to counter the tendency towards their de-population in favour of the urban areas.

The total cost of these concessions to the Exchequer will be £4½ million in a full year and £3¾ million this year. The

exemption for rural areas will come into operation on 1st May, the other changes from 30th May.

EARNED INCOME RELIEF

I now turn to the question of direct taxation reliefs. It is very generally agreed that the incidence of Income Tax upon the medium paid wage-earner and the lower salaried members of the managerial and technical staffs is such as to act as a disincentive to greater efforts in production. It has, therefore, been suggested that income tax should not be payable upon overtime earnings or bonus payments of any kind. I have examined this proposition very carefully, but have come to the conclusion that it is wholly impracticable, even if desirable. Administratively, I do not see how it could he worked out, unless a nominal basic wage were assessed for every industry and every process in the country; and that is quite an impossible task, and, anyway, would take years to perform. Nor would it be at all fair as between persons on fixed wages and salaries which include overtime, and those who get paid extra for more time worked or more production achieved in a given time.

I have, therefore, come to the conclusion that the only practicable way of removing the disincentive lies in increasing the Earned Income Relief, and, at the same time, giving reliefs on the scale of graduation, so that the great majority of all workers will be relieved from any liability at the standard rate.

I propose, in the first instance, to increase the Earned Income Relief from is present level of one-sixth, subject to a maximum allowance of £250, to one-fifth, subject to a new maximum of £400. This restores the full pre-war measure of the allowance so far as the rate is concerned, and is an improvement upon the prewar limit of £300.

This increase will not only raise the point at which liability to tax begins, and thereby relieve half a million persons from paying any income tax at all, but will, in effect, reduce the rate of tax chargeable on additional earnings. The maximum rate of tax any worker will have to pay will be 7s. 2d. in the pound, as against the present 7s. 6d. The increase in the maximum of the allowance will raise the total earned income qualifying for relief from £1,500 to £2,000, and


is designed to give relief to administrative, professional, and scientific workers.

I have been most anxious to do something to assist pensioners and other old persons living on small incomes, for whom we all, I am sure, have the greatest sympathy. As pensions are dealt with as earned income for Income Tax purposes, and as the age relief for elderly persons over 65 years of age on small investment incomes up to £500 a year likewise enables them to be treated as if they were in receipt of earned incomes, both these classes will benefit from the increase in the earned income relief, as, indeed, from the further proposals which I shall make in a moment or two. I propose, in addition, to raise the exemption limit from £120 to £135, to help the smallest of these incomes.

These changes will cost £46½ million in a full year and £40 million this year.

MARRIED WOMEN IN INDUSTRY

I next propose to do something for married women in industry, as we are most anxious to encourage as many married women as possible to enter industry at the present time. Today, when the wife goes out to work, a special allowance of £110 is given, in addition to the married allowance of £180. This is already very favourable treatment, as it means that the married couple, who both work, receive an allowance of £290, as against £220 for two single persons. However, only one set of reduced rate reliefs is given to the working couple, so that, if the husband is already paying tax at the standard rate, anything the wife earns above £110, plus the earned income relief, is liable to tax at the standard rate; whereas, in the case of a single person working alongside of her, the first £50 is chargeable at 3s. and the next £75 at 6s.

I propose to give the wife in employment the benefit of reduced rate reliefs as well as the husband. The wife in employment will, therefore, enjoy precisely the same allowances from her earnings as the single woman with whom she works. The proposal also has administrative advantages, as it will avoid troublesome adjustments in P.A.Y.E. which have at present to be made in the case of the husband and wife, both working. This relief will cost £4½ million in a full year and £2 million this year.

REDUCED RATE RELIEF

Finally, I propose to widen the band of income charged at the reduced rate of tax, which will benefit most markedly those whose incomes will no longer reach the standard rate even when they work overtime or receive extra wages for increased production.

At present, the first £50 of taxable income is chargeable at 3s. and the next £75 at 6s. I propose increasing this, by enlarging the 6s. step to £200, so that, in future, the first £50 will be chargeable at 3s. and the next £200 at 6s. After allowing for the increased Earned Income Relief, these rates become, effectively, 2s. 5d. and 4s. 10d. in the £. At present, the single man becomes liable to the top rate of 7s. 6d. in the £—making allowance for the Earned Income Relief—if he earns regularly more than £5 12s. a week; in future, he will not be so liable until he earns £8 17s. a week, and then only at 7s. 2d. instead of at 7s. 6d. For a married man with no children, the present figure is £7 4s.; in future, it will be £10 10S. A married man with two children will be liable to the top rate only if he earns more than £13 8s. a week, compared to the present figure of £10. The married woman in employment will, of course, benefit equally by this proposal in future. Last year, of the 18,500,000 people in the Income Tax field, 4,500,000 paid some tax at the standard rate. In future, less than 2,000,000 will have to pay any tax at the standard rate. This relief will cost £50 million in a full year and £44 million this year.

EFFECT OF RELIEFS

It is, of course, quite impossible to contemplate freeing all workers from any direct taxation; nor, I am certain, would they ask, in existing circumstances, for any such exemption. What I have been anxious to do is to remove, as far as possible, the disincentive which arises from a high rate of taxation on marginal earnings.

Let us remember that, despite the drawbacks of high taxation and high prices, the workers of this country have been doing a good job, as is shown by our present level of production. If, by these reliefs, we can help them to do even better, then certainly the reliefs will be fully justified.

Under the proposed arrangements, the position in that respect will be as follows.


For the single person earning £6 a week, a tax of 12s. 3d. will be payable in all, compared with 14s. 5d. at present. If an additional £1 is earned for overtime, he would, at present, have to pay 7s. 6d. on that £1; in future, he will pay only 4s. 10d. The married man with two children, earning £10 a week, will, in future, pay only 9s. 6d. in Income Tax, as against 11s. 6d. at present. If he earns £1 on overtime, instead of paying 7s. 6d., as at present, he will pay only 4s. 10d. Below those figures, the payments will, of course, be lower.

I believe that these concessions, amounting to over £100 million a year, will be of great importance to our production drive, and I cannot think that anyone will now have a just cause to complain that he is held back from increased effort on the score of the Income Tax burden.

The increased reliefs I have put forward will necessitate new P.A.Y.E. tables, and these will be in the hands of employers in time for the new scale to come into operation in the week beginning 6th July. The relief then given will be cumulative relief, as from the beginning of the tax year.

The reliefs in Income Tax which I have just announced will carry a step further the process inaugurated by my predecessor in 1945. Already, the reliefs given since that date have amounted to £480 million, a very large part of which benefitted particularly the lower income groups. With the present remissions, which will amount to £101 million in a full year, the total becomes £581 million in relief in a period of less than three years.

BUDGET SURPLUS

With these reliefs, the final Budget surplus—on the orthodox lines of accountancy—comes to £789 million. The overall surplus of all Government revenue over all forms of Government expenditure, capital and revenue, for the year is £330 million, and this is a measure of the contribution which, I hope, will be made by the Budget to the total saving necessary to counter the inflationary tendencies.

CONCLUSION

No one would deny that we as a people are passing through a time of the greatest economic difficulty; but I am convinced

that we as a nation are tackling our problems with a sense of realism and with a determination which hold out the promise of a victorious solution of our problems. We have called upon every section of the community to help in this all-out struggle. I have tried, in the light of the review of our present economic situation, to frame Budget proposals which will back up that effort of the nation by Government action.

Some, particularly those with considerable invested capital, are being asked to bear greater burdens for the special effort of this year; others, particularly those to whom we look for our production and who rely upon moderate incomes, will benefit by very substantial reliefs in their taxation. This is both fair, and in accordance with our economic needs, and will be matched by the large economics effected in Government expenditure.

As determined democrats we must counter those elements in our country that are attempting to mislead our people and so bring about a breakdown of our economy to serve their own ends. We shall, however, only succeed in that if we are prepared to put forward live and progressive democratic policies, taking full account of the long awaited reforms which our people demand and deserve.

The financial programme of the Budget will serve to reduce the pressure and ill effects of inflation, and will strengthen our productive effort. By this action we shall make plain, both to our own people and to that large part of the world which is watching anxiously to see how we meet the challenge of our difficulties, that we are building—it may be somewhat slowly and painfully—strong and stable foundations for our reconstruction, by the ordered use of our resources, by guarding the value of our currency, and by the way we are determined to tackle our job—the way of free men, working together in a free democracy for the good of our nation and of all the free peoples of the world.

The proposals that I have put forward today are, I believe, one more proof that we can, by democratic methods, cope with the most difficult economic situations. The political, economic, and spiritual freedom of our people is of a value beyond all price. We shall only preserve


that freedom so long as we are prepared, in critical times like the present, to subordinate our personal interests to the greater good of our country as a whole. It is in that spirit that I hope that these Budget proposals will be considered by this Committee.

The Chairman: It is now my duty to propose the necessary Resolutions to the Committee. I have arranged for copies to be passed round to hon. Members in their places, and I will pause for a moment to enable that to be done. I assume the Committee will then be willing to take the Resolutions summarily, in accordance with recent custom.

CUSTOMS AND EXCISE

1. Tobacco (Customs)

Resolved:
That, as from the seventh day of April, nineteen hundred and forty-eight, the duties of customs chargeable on tobacco under Section three of the Finance Act, 1947, shall be charged at the increased rates set out in the following Table.

TABLE


Description of Tobacco.
Rates of duty per pound.



Full rates.
Preferential rates.



£
s.
d.
£
s.
d.


Tobacco unmanufacfured—








containing 10 lbs. or more of moisture in every 100 lbs. Weight thereof—








unstripped
2
18
2
2
16
7½


stripped
2
18
2½
2
16
7⅞


containing less than 10 lbs. of moisture in every 100 lbs. Weight thereof—








unstripped
2
19
2
2
17
5½


stripped
2
19
2½
2
17
5⅞


Tobacco manufactured, viz.:—








Cigars
3
7
9
3
4
9⅝


Cigarettes
3
3
8
3
1
3½


Cavendish or Negro-head
3
2
8
3
0
5


Cavendish or Negro-head manufactured in bond
3
0
8
2
18
8½


Other manufactured tobacco
3
0
11
2
18
11½

Description of Tobacco.
Rates of duty per pound.



Full rates.
Preferential rates.



£
s.
d.
£
s.
d.


Snuff—








containing more than 13 lbs. of moisture in every 100 lbs. Weight thereof
3
0
2
2
18
3⅞


containing not more than 13 lbs. of moisture in every 100 lbs. Weight thereof
3
2
8
3
0
5


and so in proportion for any less quantity.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

2. Tobacco (Excise)

Resolved:
That, as from the seventh day of April, nineteen hundred and forty-eight, the duties of excise chargeable on tobacco under Section three of the Finance Act, 1947, shall be charged at the increased rates set out in the following Table.

TABLE


Description of Tobacco.
Rates of duty per pound.


Tobacco unmanufactured—
£
s.
d.


containing 10 lbs. or more of moisture in every 100 lbs. weight thereof
2
16
5½


containing less than 10 lbs. of moisture in every 100 lbs. weight thereof
2
17
3½


Tobacco manufactured, viz.:





Cavendish or Negrohead manufactured in bond
2
18
8½


and so in proportion for any less quantity.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

3. Tobacco (Drawback)

Resolved:
That, as respects tobacco on which there have been paid duties of customs or excise at the increased rates for which provision is made by any Resolution having statutory effect and passed by the Committee of Ways and Means together with this Resolution, drawback shall be allowed at the rates set out in the following Table instead of at the rates set out in Part III of the First Schedule to the Finance Act, 1947.

TABLE



Rates per pound


Description of Tobacco.
In respect of tobacco on which full customs duty has been paid.
In respect of tobacco on which customs duty at a preferential rate or excise duty has been paid.



£
s.
d.
£
s.
d.


Cigars
3
2
2
3
0
7½


Cigarettes
2
19
2
2
17
7½


Cut, roll, cake or other manufactured tobacco
2
18
11
2
17
4½


Snuff (not being offal snuff)
2
18
8
2
17
1½


Stalks, shorts or other refuse of tobacco, including offal snuff
2
18
5
2
16
10½

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

4. Tobacco (Excise Duty on stock in hand)

Resolved:
That—

(a) on all stocks of leaf tobacco and of manufactured tobacco of any description which, at five o'clock in the afternoon on the sixth day of April, nineteen hundred and forty-eight, are in the ownership or possession of a licensed manufacturer of tobacco and in any place in the United Kingdom, other than a bonded warehouse, a duty of excise, payable by the manufacturer, shall be charged and the rate of the duty shall be—

(i) so far as the stocks consist of leaf tobacco, three shillings and fourpence for every pound weight of the stocks, and
(ii) so tar as the stocks consist of manufactured tobacco of any description, three shillings and fourpence for every pound weight of leaf tobacco from which, in the opinion of the Commissioners of Customs and Excise, the stocks are derived;
(b) where it is shown to the satisfaction of the Commissioners of Customs and Excise that there have been paid on any tobacco either full or preferential duties of customs at the rates in force immediately before the passing of this Resolution and also the duty of excise provided for by

this Resolution, drawback shall be allowable in respect of the tobacco at the like rates and subject to the like conditions as the drawback allowable in respect of tobacco on which there have been paid full or preferential duties of customs, as the case may be, at the rates provided for by any Resolution passed by the Committee of Ways and Means together with this Resolution."

5. Beer (Excise)

Resolved:
That, as from the seventh day of April, nineteen hundred and forty-eight, the rates of the duty of excise charged in respect of beer under section one of the Finance (No. 2) Act, 1939, shall be increased by adding—

(a) nineteen shillings and a penny half-penny to the sums of seven pounds nineteen shillings and ninepence specified in Part I of the First Schedule to the Finance (No. 2) Act, 1947; and
(b) eightpence halfpenny to the sum of five shillings and elevenpence so specified;
and, in the case of beer in respect of which it is shown to the satisfaction of the Commissioners of Customs and Excise that duty at the rates increased as aforesaid has been paid, the excise drawback allowed under the said section one shall be allowed at rates increased by adding—

(i) nineteen shillings and a penny halfpenny to the sums of seven pounds nineteen shillings and elevenpence specified in Part II of the said First Schedule; and
(ii) eightpence halfpenny to the sum of five shillings and elevenpence so specified.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

6. Beer (Customs)

Resolved:
That, as from the seventh day of April, nineteen hundred and forty-eight, the rates of the duty of customs charged in respect of beer under section one of the Finance (No. 2) Act, 1939, shall be increased by adding—

(a) nineteen shillings and a penny halfpenny to the sums of eight pounds and twopence specified in Part III of the First Schedule to the Finance (No. 2) Act, 1947, and the sums of nine pounds and twopence specified in Part IV of that Schedule; and
(b) eightpence halfpenny to the sums of five shillings and elevenpence specified in those Parts of that Schedule;
and, in the case of beer in respect of which it is shown to the satisfaction of the Commissioners of Customs and Excise that duty at the rates increased as aforesaid has been paid, the customs drawback allowed under the said Section


one shall be allowed at rates increased by adding—

(i) nineteen shillings and a penny halfpenny to the sums of seven pounds nineteen shillings and elevenpence specified in Part V of the said First Schedule and the sums of eight pounds nineteen shillings and elevenpence specified in Part VI of that Schedule; and
(ii) eightpence halfpenny to the sums of five shillings and elevenpence specified in those Parts of that Schedule.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

7. Spirits (Excise)

Resolved:
That, as from the seventh day of April, nineteen hundred and forty-eight, the rate of the duty of excise charged on spirits by Section three of the Finance Act, 1920, in addition to the duties specified in Part III of the First Schedule to that Act, shall be increased to ten

TABLE


Description of Spirits.
Preferential rates.
Full rates.


In cask.
In bottle.
In cask.
In bottle.


£
s.
d.
£
s.
d.
£
s.
d.
£
s.
d.


For every gallon computed at proof of—














Brandy or rum
10
11
2
10
12
2
10
13
8
10
14
8


Imitation rum or geneva
10
11
3
10
12
3
10
13
9
10
14
9


Unsweetened spirits other than those already enumerated
10
11
3
10
11
3
10
13
9
10
13
9


For every gallon of perfumed spirits
9
12
0
9
13
0
9
12
0
9
13
0


For every gallon of liquers, cordials, mixtures and other preparations in bottle entered in such manner as to indicate that the strength is not to be tested
—
14
5
10
—
14
9
2


For every gallon computed at proof of spirits of any description not heretofore mentioned, including naphtha and methylic alcohol purified so as to be potable, and mixtures and preparations containing spirits
10
11
3
10
12
3
10
13
9
10
14
9

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

9. Wines (Customs)

Resolved:
That, as from the seventh day of April, nineteen hundred and forty-eight, the duties of customs charged on wines under paragraph (a) and paragraph (c) of subsection (1) of section three of the Finance (No. 2) Act, 1939, shall respectively be charged at the rates set out in Part I and Part II of the following Table, and the duty charged under paragraph (b) of that subsection on wine not exceeding twenty-seven degrees of proof spirit and being an Empire product shall be calculated accordingly.

pounds ten shillings and tenpence per gallon computed at proof.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

8. Spirits (Customs)

Resolved:
That, as from the seventh day of April, nineteen hundred and forty-eight, the duties of customs charged on spirits of the descriptions set out in the first column of the following Table by Section three of the Finance Act, 1920, in addition to the duties specified in Part II of the First Schedule to that Act. Shall—

(a) in the case of spirits being Empire products, be charged at the rates shown in the second column of that Table; and
(b) in the case of spirits not being Empire products, be charged at the rates shown in the third column of that Table.

TABLE


PART I


Wines not being Empire Products


Description of Wine.
Rate of duty per gallon.



£
s.
d.


Not exceeding 25 degrees proof spirit
1
5
0


Exceeding 25 degrees proof spirit and not exceeding 42 degrees proof spirit
2
10
0


For every degree or fraction of a degree above 42 degrees proof spirit, an additional duty
0
4
2


Sparkling, an additional duty
0
12
6


Still, in bottle, an additional duty
0
2
6

PART II


Wines being Empire Products


Description of Wine.
Rate of duty per gallon.



£
s.
d.


Exceeding 27 degrees proof spirit and not exceeding 42 degrees proof spirit
2
0
0


For every degree or fraction of a degree above 42 degrees proof spirit, an additional duty
0
3
4


Sparkling, an additional duty
0
12
6


Still, in bottle, an additional duty
0
1
6

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

10. Sweets (Excise)

Resolved:
That, as from the seventh day of April, nineteen hundred and forty-eight, the duty of excise on sweets charged under section six of the Finance Act, 1927, shall be charged at the rates set out in the following Table.

TABLE


Description of Sweets.
Rate of duty per gallon.



£
s.
d.


Not exceeding 27 degrees proof spirit
1
2
6


Exceeding 27 degrees proof spirit
1
10
5


Sparkling, an additional duty
0
6
0

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

11. Key Industry Duty (Customs)

Resolved:
That duties of customs chargeable under Part I of the Safeguarding of Industries Act, 1921, for a period expiring on the nineteenth day of August, nineteen hundred and forty-eight, shall continue to be chargeable for a further period of three years from the said day.

12. Preferential rates of duties on Tractors and Cycles (Customs)

Resolved:
That the Treasury, having regard to the terms of the Geneva Agreement on Tariffs and Trade for the time being in force, shall have power by order from time to time to vary the rates of duties of customs on agricultural tractors (not being track-laying tractors), motor bicycles and motor tricycles, being Empire goods.

13. Preferential rates of silk duties (Customs)

Resolved:
That the Treasury, having regard to the terms of the Geneva Agreement on Tariffs and Trade for the time being in force, shall have power by order from time to time to vary the rates of the duties of customs on articles of apparel of, silk or artificial silk, being Empire products.

14. Rice in the Husk (Customs)

Resolved:
That in section eight of the Finance Act, 1935 (which charges an Ottawa duty on rice in the husk) the proviso to subsection (1) (which affects the duration of that duty) shall cease to have effect

15. Patent Leather (Customs)

Resolved:
That in section six of the Finance Act, 1934 (which imposes an Ottawa duty on certain patent leather) the proviso to subsection (2) (which affects the duration of that duty) shall cease to have effect.

16. Table Waters (Customs)

Resolved:
That, as from the first day of May, nineteen hundred and forty-eight, the duties of customs chargeable on table waters shall cease.

17. Table Waters (Excise)

Resolved:
That, as from the first day of May, nineteen hundred and forty-eight,—

(a) the duties of excise on table waters, and
(b) the duties of excise on licences to be taken out annually by persons who sell table waters,
shall cease.

18. Pool Betting Duty (Excise)

Resolved:
That, as respects bets (other than bets made by means of a totalisator set up on a dog racecourse which is a track in respect of which a licence granted under Part I of the Betting and Lotteries Act, 1934, is for the time being in force) made, whether before or after the passing of this Resolution, by reference to any event taking place after the passing of this Resolution—

(a) section six of the Finance (No. 2) Act, 1947, shall have effect as if in subsection (1) thereof for the words 'ten per cent.' there were substituted the words 'twenty per cent.'; and
(b) without prejudice to the definition of pool betting contained in the said section six, bets shall be deemed for the purposes of that section and of the Fifth Schedule to the said Act to be made by way of pool betting whenever a number of persons make bets on terms that the winnings of such of


those persons as are winners shall be, or shall include, an amount (not determined by reference to the stake-money paid or agreed to be paid by those persons) which is divisible in any proportions among such of those persons as are winners.
For the purposes of this Resolution, the expressions 'bet' and 'totalisator' have the same meaning as in the said section six.
And it is hereby declared that it is expedient in the public interest that this Resolution

TABLE


For a course where the public is admitted to
A licence authorizing the bookmaker to carry on bookmaking in
Amount of duty on the licence.


1.
2.
3.
4.


A single enclosure
The enclosure
£12



Two enclosures and no more.
The cheaper enclosure
£6
Where there are to be more races than eight at the meeting an additional amount of one quarter of the amount in the third column for each two races in excess of eight; where there is to be an odd number of races the additional amount shall be the same as for the next higher even number.



The dearer enclosure
£24



The cheapest enclosure
£6


More than two enclosures.
The cheapest but one enclosure
£18



Any other enclosure
£48

20. Exemption from Entertainments Duty (Excise)

Resolved:
That entertainments duty shall not be charged on payments for admission to any entertainment held on or after the first day of May, nineteen hundred and forty-eight, as respects which the Commissioners of Customs and Excise are satisfied—

(a) that the entertainment is held in a building in a rural parish within the meaning of the Local Government Act, 1933, with a population not exceeding two thousand or with a population not exceeding sixty-four to the square mile; and
(b) that the seating capacity of the building is not for more than two hundred persons,
and this Resolution shall have effect in Scotland with the substitution, for the reference to a rural parish within the meaning of the Local Government Act, 1933, of a reference to a small burgh within the meaning of the Local Government (Scotland) Act, 1947, or a landward parish or the landward part of a parish which is partly landward and partly burghal.
In this Resolution references to buildings do not include references to buildings not attached to permanent foundations.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the

should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

19. Bookmakers' Licence Duty (Excise)

Resolved:
That a duty of excise of an amount determined in accordance with the following Table shall be charged on a licence to be taken out, on the occasion of a dog race-meeting on a course where there is a totalisator, to carry on bookmaking at the meeting.

provisions of the Provisional Collection of Taxes Act, 1913.

21. Reduced rates of Entertainments Duty for stage plays, etc. (Excise)

Resolved:
That as respects any payment for admission to any entertainment held on or after the thirtieth day of May, nineteen hundred and forty-eight, Section six of the Finance Act, 1943, shall have effect as if for the rates set out in Part I of the Fifth Schedule to that Act there were substituted the rates set out in the following Table:

TABLE


Amount of Payment.
Rate of duty.


Where the amount of the payment, excluding the amount of duty,—



exceeds 1s. and does not exceed 1s. 5d.
1d.


exceeds 1s. 5d.
1d. for the first 1s. 5d. and 1d. for every 5d. or part of 5d. over 1s. 5d.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

22. Mechanically Propelled Vehicles Duty (Receptacles on vehicles)

Resolved:
That the weight of a receptacle shall not be exempt from inclusion under proviso (b) to subsection (1) of section seven of the Finance Act, 1937, in the unladen weight of a goods vehicle by reason that it is constructed or adapted for the purpose of being lifted on or off the vehicle with goods or burden contained therein, unless it is shown that it is from time to time actually used for that purpose in the ordinary course of business, but the weight of a receptacle shall not be included in the unladen weight of a goods vehicle under that section if it is specially constructed or specially adapted for carrying livestock and is used solely as follows, that is to say, for carrying livestock or, on a journey the main purpose of which is the carriage of livestock, or on the way to the loading point or returning from the discharging point on such a journey, for carrying agricultural produce or agricultural requisites.

PURCHASE TAX

23. Purchase Tax (Chargeable goods and rates of tax)

Resolved:
That—
(a) as from the ninth day of April, nineteen hundred and forty-eight, the provisions of the following Table shall have effect, in substitution for any enactment previously in force, for

TABLE

PART I

CONSTRUCTION

1. The provisions of this Part of this Table shall have effect for the construction of Part II thereof.


2. The words "First", "Second" and "Third" indicate the first, second and third rates of purchase tax.


3. The first, second and third rates of purchase tax are respectively one-third, two-thirds and one hundred per cent. of the wholesale value of the goods.


4. Where goods are chargeable under the following provisions of this Table at more than one rate of tax, purchase tax shall be chargeable in respect of those goods at the higher or highest of those rates.


5. The expression "exempt" means exempt from all charge of purchase tax.


6. The expression "utility" in relation to any goods means goods which, under any enactment made by the Board of Trade, are duly marked with a mark defined as the utility mark by any such enactment.

PART II

RATES OF TAX

GROUP I.


Garments and footwear:—


(a) Articles not comprised in any of the following paragraphs of this
Group
First.


(b) Utility fully fashioned stockings
First.


(c) Utility garments made wholly or mainly of fur skin
Second.


(d) Utility articles not comprised in paragraphs (b) or (c) of this Group
Exempt.


(e) Articles made wholly or partly of rough-tanned, undyed sheep or lamb skin with wool attached and designed specially for industrial use
First.

determining what goods are chargeable goods for the purposes of purchase tax and the rates of tax chargeable in respect therof;

(b) as from the said day, in determining the question which of two rates of purchase tax is chargeable in respect of a vehicle, where value of the vehicle, the retail value shall be ascertained on the assumption that the seller by retail suffered the incidence of tax at the lower of the two rates in question;

(c) the Treasury shall have power by order to make any change in the classes of goods which are chargeable goods or in the rate at which tax is chargeable in respect of goods of any class;

(d) any change effected by or under any enactment in the classes of goods which are chargeable goods, or in the rate at which tax is chargeable in respect of goods of any class, taking effect at any time after the passing of this Resolution shall have effect—

(i) in relation to a purchase of goods delivered under the purchase after that time notwithstanding that the purchase was made before that time; and
(ii) in relation to the application of a chargeable process completed after that time notwithstanding that the process was applied in pursuance of a contract made before that time.

(f) Articles made wholly or partly of fur skin (including any skin with fur, hair or wool attached) other than those comprised in paragraphs (c) or (e) of this Group
Third.


(g) Protective boots designed for use by miners or quarrymen or moulders
Exempt.


(h) Clogs and other wooden-soled footwear, other than articles made wholly or partly of fur skin (including any skin with fur. hair or wool attached)
Exempt.


(i) Footwear of a kind suitable for young children's wear, other than articles made wholly or partly of fur skin (including any skin with fur, hair or wool attached)
Exempt.


(j) Surgical appliances
Exempt.

GROUP 2.


Headgear:—


(a) Articles not comprised in any of the following paragraphs of this
Group
First.


(b) Articles made wholly or partly of rough-tanned, undyed sheep or lamb skin with wool attached and designed specially for industrial use
First.


(c) Articles made wholly or partly of fur skin (including any skin with fur, hair or wool attached) other than those comprised in paragraphs (b) or (d) of this Group
Third.


(d) Utility articles
Exempt.


(e) Protective helmets designed for use by miners or quarrymen
Exempt.


(f) Wigs
Exempt.


(g) Surgical appliances
Exempt.

GROUP 3.


Gloves:—


(a) Articles not comprised in any of the following paragraphs of this Group
First.


(b) Articles made wholly or partly of rough-tanned, undyed sheep or lamb skin with wool attached and designed specially for industrial use
First.


(c) Articles made wholly or partly of fur skin (including any skin with fur, hair or wool attached) other than those comprised in paragraphs (b) or (d) of this Group
Third.


(d) Utility articles
Exempt.


(e) Surgical appliances
Exempt.

GROUP 4.


Haberdashery, including patterns for making apparel:—



(a) Articles not comprised in any of the following paragraphs of this Group
First


(b) Articles made wholly or partly of fur skin (including any skin with fur, hair or wool attached)
Third.


(c) Utility articles
Exempt.


(d) Sewing thread, and mending and knitting wool
Exempt.

GROUP 5.


Textile articles of a kind used for domestic purposes and articles made of any material which are of a kind used as domestic soft furnishings or as domestic bedding:—



(a) Articles not comprised in any of the following paragraphs of this Group
Second.


(b) Utility articles
Exempt.


(c) Floor coverings
Not chargeable under this Group.

GROUP 6.


Tissues and fabrics:—



(a) Tissues and fabrics whether in the piece, shaped or partly made-up, including such tissues and fabrics which have been dyed, printed, coated or otherwise treated, but not including tissues and fabrics comprised in any of the following paragraphs of this Group
Second.


(b) Utility cloth
Exempt.


(c) Fabrics of the following descriptions, not being woven-figured fabrics, pile fabrics, braids, fringes, gimps or similar trimmings, furnishing fabrics, suitings or overcoatings, or fabrics which have been bleached, printed, embroidered or otherwise decorated:—



(i) jute fabrics
Exempt.


(ii) felt fabrics
Exempt.


(iii) glass fibre fabrics
Exempt.


(iv) asbestos fabrics
Exempt.

(v) woven fabrics not containing wool which weigh not less than 12 ounces per square yard
Exempt.


(vi) woven fabrics containing wool which weigh not less than 18 ounces per square yard
Exempt.


(d) Bolting cloth
Exempt.


(e) Machinery belting
Exempt.


(f) Tracing cloth
Exempt.


(g) Abrasive cloth
Exempt.


(h) Varnished or bitumenised cloth and varnished or bitumenised tape of the kinds used for the purpose of electrical insulation
Exempt.


(i) Netting of cordage, rope or twine, including fishing net, bat not including composite fabrics incorporating such netting and not including sports netting
Exempt.


(j) Rags
Exempt.


(k) Lamp wick
Exempt.


(l) Fabrics of a kind suitable for and prepared or put up in special packs as surgical dressings
Exempt.


(m) Floor coverings
Not chargeable under this Group.

GROUP 7.


Plastic sheeting in the piece or in cut lengths of a kind suitable for making garments or curtains, tablecloths and similar soft furnishings
Second.

GROUP 8.


Fur skin (including any skin with fur, hair or wool attached), dressed
Third.

GROUP 9.


(a) Floor coverings
First.


(b) (i) Rugs made of fur skin (including any skin with fur, hair or wool attached)
Third.


(ii) Other rugs, except floor rugs
Second.

GROUP 10.


(a) Wallpaper
First.


(b) Window display papers, being fancy papers coated, stained, printed, embossed, laminated or otherwise decorated, including coated poster papers, but not including such papers cut to size suitable for use as box papers or as printing paper
First.


(c) Paper handkerchiefs, paper towels, paper serviettes, paper doyleys, paper table covers, paper table decorations, shelf paper, and similar articles of paper
Second.

GROUP 11.


Furniture, hardware, ironmongery, turnery, table-ware, kitchen-ware and toilet-ware, being articles of a kind used for domestic or office purposes:—


(a) Articles not comprised in any of the following paragraphs of this Group
First.


(b) (i) Tables, desks, chairs, sideboards, beds, chests, drawers, cupboards and similar furniture, except those comprised in paragraph (e) of this Group
Second.


(ii) wire and spring mattresses except those comprised in paragraph (e) of this Group
Second.


(c) Mirrors, whether framed or not
Third.


(d) Glassware of cut glass
Third.


(e) Utility furniture and component parts of utility furniture
Exempt.


(f) Invalid chairs
Exempt.


(g) Picture frames of wood, plain, gilt or coloured, with or without ornamental composition, which are made from moulding of a width not less at any point than three inches
Exempt.


(h) Metal clothes lockers of a kind installed in cloakrooms other than domestic cloakrooms
Exempt.


(i) Vessels designed for use primarily as containers for food or drink in the course of its storage, preparation or consumption, and lids for use with such vessels, but not including articles of cut glass, articles made wholly or partly of stainless steel, articles coated or plated with silver, or articles of nickel, Britannia metal, nickel silver, pewter or similar metals
Not chargeable under this Group.


(j) Household brooms and household brushes
Exempt.


(k) Dustbins, buckets, pails and sanitary pans, and lids for any of those articles
Exempt.


(l) Thermal insulation covers designed for domestic water systems
Exempt.


(m) Thermostats
Exempt.

(n) Builders' hardware, sanitary ware and other articles of kinds ordinarily installed by builders as fixtures
Not chargeable under this Group.


(o) Fireguards, except those incorporating heating elements
Exempt.


(p) Accessories for domestic stoves, grates, ranges and fireplaces, being accessories designed for use as fuel economisers, the following:—



(i) fire-bricks and similar articles
Exempt.


(ii) accessories designed so as, when placed above the fuel in an open fire, temporarily to convert the fire into an enclosed fire
Exempt.


(q) Trivets and similar articles being accessories for domestic stoves, grates, ranges and fireplaces
Exempt.

GROUP 12.


Cooking, heating, refrigerating and other appliances and apparatus, whether mechanically operated or not, being appliances and apparatus of a kind used for domestic purposes, except mechanical lighters:—



(a) Appliances and apparatus not comprised in any of the following paragraphs of this Group
First.


(b) Appliances and apparatus of a kind suitable for operation from electric or gas mains for the conversion of electricity or gas into heat for the purpose of space heating or water heating, of the following descriptions:—



(i) space heating appliances and apparatus, including appliances and apparatus of a kind used for boiling or cooking and also for space heating
Third.


(ii) instantaneous water heaters
Third.


(iii) immersion water heaters
Third.


(iv) storage water heaters
Third.


(v) circulator water heaters for tank storage
Third.


(vi) water boilers for tank storage or central heating
Third.


(c) Cooking space heating and water heating appliances of a kind not suitable for operation from electric or gas mains, of the following descriptions:—



(i) stoves, grates, ranges, fireplaces and ovens
Exempt.


(ii) radiators and convectors
Exempt.


(iii) storage water heaters
Exempt.


(iv) circulator water heaters for tank storage
Exempt.


(v) water boilers for tank storage or central heating
Exempt.


(d) Parts of such stoves, grates, ranges, fireplaces and ovens as are comprised in paragraph (c) of this Group
Exempt.


(e) Space heating appliances incorporating electric fans or electric pumps, or both such fans and such pumps, designed to consume in all not more than 100 watts, but not including appliances otherwise electrically operated and not including appliances operated by gas
Exempt.


(f) Wash boilers and wash coppers
Exempt.


(g) Electric kettles and other cooking utensils incorporating heating elements
Exempt.


(h) Smoothing irons and pressing irons
Exempt.

GROUP 13.


Cutlery suitable for domestic or personal use and spoons, forks and similar articles suitable for domestic use:—



(a) Articles not comprised in any of the following paragraphs of this Group and blanks of articles not so comprised
First.


(b) Articles designed for use solely in the course of any trade, profession, employment or vocation and unsuitable for use for other purposes
Exempt.


(c) Articles consisting of a knife and fork combined specially designed for use by persons not having the full use of their arms, and other articles specially designed for use by such persons
Exempt.

GROUP 14.


(a) Fittings of a kind used for interior domestic or office lighting:—



(i) table and floor standards (whether complete or not)
First.


(ii) brackets, pendants, candelabra and electroliers
First.


(iii) lanterns, shades, bowls and reflectors
First.


(iv) glass chimneys and similar primary glasses being chimneys and glasses designed for oil or candle lamps
Exempt.


(v) other illuminating glassware
First.


(b) Incandescent mantles
First.


(c) Electric filament lamps not exceeding 250 watts and fluorescent lighting tubes not exceeding 80 watts
First.

GROUP 15.


Hand lamps and hand torches:—



(a) Articles not comprised in any of the following paragraphs of this Group
First.


(b) Acetylene hand lamps
Exempt.


(c) Miners' safety lamps
Exempt.

GROUP 16.


(a) Lawn mowers and garden rollers
First.


(b) Garden furniture
Second.


(c) Garden ornaments
Third.

GROUP 17.


(a) Clocks and watches:—



(i) articles not comprised in any of the following sub-paragraphs of this paragraph
Second


(ii) clocks and watches made wholly or partly of gold, silver or other precious metal (including gold plate, but not including base metal which is gilt or silver-plated)
Third.


(iii) clocks designed for use as public clocks with dials not less than 2 feet in diameter or with dials having a diagonal measurement of 2 feet 6 inches or more
Exempt.


(b) Clock movements and watch movements:—



(i) articles not comprised in any of the following sub-paragraphs of this paragraph
Second.


(ii) movements, complete with hands, designed for mechanical and impulse clocks with dials not less than 2 feet in diameter or with dials having a diagonal measurement of 2 feet 6 inches or more
Exempt.


(iii) movements, complete with hands, designed for synchronous clocks with dials not less than 2 feet 6 inches in diameter or with dials having a diagonal measurement of 3 feet or more
Exempt.


(c) Cases for, and accessories to, clocks and watches, and watch chains, wristlet watch straps and similar articles:—



(i) articles not comprised in the following sub-paragraph of this paragraph
Second.


(ii) articles made wholly or partly of gold, silver or other precious metal (including gold plate, but not including base metal which is gilt or silver-plated)
Third.

GROUP 18.


(a) Wireless receiving sets of the domestic, portable or road vehicle types (including kits of parts, whether or not assembled and whether or not complete, of a kind used in the assembly of such sets) and valves suitable for use therewith
Second.


(b) Batteries and accumulators suitable for use with wireless receiving sets of the domestic or portable type, other than dry batteries of not more than 6 volts
First.

GROUP 19.


(a) Musical instruments including gramophones, radiogramophones, player pianos and similar instruments, and parts thereof and accessories thereto:—



(i) articles and parts thereof and accessories thereto not comprised in any of the following sub-paragraphs of this paragraph
Second.


(ii) pipe organs, electronic organs and reed organs (except the types designed to be carried when played) and parts thereof and accessories thereto
Exempt.


(iii) gramophones specially designed for reproduction of speech from records specially adapted for the use of the blind
Exempt.


(b) Player piano records and gramophone records other than gramophone records for the reproduction of speech, specially adapted for the use of the blind
Second.

GROUP 20.


Toys and games (including coin or disc operated machines), and appliances, apparatus, accessories and requisites for sports, games, amusements, gymnastics or athletics (not being garments, footwear, road vehicles, bicycles or tricycles) including parts thereof and accessories thereto:—



(a) Articles not comprised in any of the following paragraphs of this Group
First.


(b) Swings, slides (including water chutes), see-saws, roundabouts and giant strides, not being mechanically operated articles
Exempt.

(c) Gliders large enough to carry human beings, and accessories for such gliders
Exempt.


(d) Boats and other vessels large enough to carry human beings, and accessories for such boats and vessels
Exempt.

GROUP 21.


(a) Umbrellas and sunshades
Second.


(b) Walking sticks and canes:—



(i) wholly of wood, except for the ferrules
First.


(ii) other kinds
Third.

GROUP 22.


Smokers' requisites, except matches and mechanical lighters
Second.

GROUP 23.


Trunks, bags, wallets, jewel cases, pouches, purses, suit cases, attache cases, baskets and similar receptacles of a kind used for personal or domestic purposes (whether fitted or not):—



(a) Articles made of leather, hide or skin:—



(i) designed for use solely for the purpose of any trade, profession, employment or vocation and unsuitable for use for other purposes
Second


(ii) other articles
Third.


(b) Articles made of other materials
Second.

GROUP 24.


(a) Photographic cameras and photographic enlargers and lenses and other parts of, and accessories to, photographic cameras and photographic enlargers:—



(i) articles not comprised in any of the following sub-paragraphs of this paragraph
Second.


(ii) cinematograph cameras for film of standard width and parts of, and accessories to, such cameras
Exempt.


(iii) articles suitable only for industrial, scientific or military use
Exempt.


(b) Unexposed, sensitised photographic paper, cloth, plates and film:—



(i) articles not comprised in any of the following subparagraphs of this paragraph
Second.


(ii) cinematograph film of standard width
Exempt.


(iii) X-ray plates, film and paper
Exempt.


(iv) ferro-prussiate, ferro-gallic and dye-line paper and cloth
Exempt.


(v) document base paper, transparent tracing paper base and tracing cloth
Exempt.

GROUP 25.


Pictures, prints, engravings, photographs, figures, busts, reliefs, vases and similar articles, of a kind produced in quantity for general sale:—



(a) Articles not comprised in any of the following paragraphs of this Group
Third.


(b) Reproductions, irrespective of size, and whether plain or coloured, of such pictures, prints, engravings and similar articles as were executed more than one hundred years before the date on which tax becomes due in respect of the reproductions
Second.


(c) Cinematograph films, film-strips and lantern slides, being films, film-strips and lantern slides containing pictures for exhibition by means of a projector
Exempt.


(d) Wallpaper
Not chargeable under this Group.

GROUP 26.


Jewellery and imitation jewellery, being articles consisting wholly or partly of stones or beads (precious, semi-precious or imitation) or of pearls (real, cultured or imitation)
Third.

GROUP 27.


(a) Goldsmiths' and silversmiths' wares, being articles made wholly or partly of gold, silver or other precious metal (including gold plate but not including base metal which is gilt or silver-plated), other than articles comprised in the following paragraph of this Group
Third.


(b) Miniatures or reproductions of the insignia of orders, decorations and medals granted by the Sovereign or conferred by or in the gift of a foreign Sovereign State or the Head of a foreign Sovereign State, and ribbons, bars and clasps designed for wear with, or with miniatures or reproductions of, such orders, decorations and medals (including made-up ribbon bars)
Exempt.

GROUP 28.


(a) Articles made wholly or partly of ivory, amber, jet, coral, natural shells or tortoiseshell, or of jade, onyx, lapis lazuli or other semiprecious stones
Third.


(b) Articles made wholly or partly of mother-of-pearl other than buttons and studs
Third.

GROUP 29.


Fancy or ornamental articles suitable for personal or domestic use, and of a kind produced in quantity for general sale:—



(a) which consist of or incorporate figures, or which are decorated by hand-painting, or which are miniatures of or otherwise imitate other articles
Third.


(b) of other descriptions, not being articles chargeable under any other Group
Second.

GROUP 30.


(a) Hair waving machines and similar hair waving appliances
First.


(b) Hair drying machines
First.

GROUP 31.


Toilet requisites except face cloths and towels:—



(a) Articles not comprised in the following paragraph of this Group
Third


(b) Brushes, combs, scissors, razors and razor blades, razor strops, razor sharpeners, dry shavers and dry shaver heads, sponges, toilet paper, dental sticks and toothpicks, not being articles supplied as part of a toilet set
First.

GROUP 32.


(a) Perfumery
Third.


(b) Toilet preparations, whether medicated or not, including cosmetics:—



(i) articles not comprised in the following sub-paragraph of this paragraph
Third.


(ii) soap made up for sale as toilet soap; soap substitutes made up for sale as substitutes for toilet soap; shaving creams; shampoos; dentifrices; eye lotions, mouth washes and antiseptics; calamine lotion and similar alleviating toilet preparations, unperfumed
First.

GROUP 33.


Drugs and medicines, manufactured or prepared, except the drugs and medicines set out in the Schedule to the Purchase Tax (No. 1) Order, 1948
First.

GROUP 34.


(a) Diaries, calendars, greeting cards and similar articles
First.


(b) Stationery and office requisites except furniture and machinery
First.

GROUP 35.


(a) Road vehicles constructed or adapted solely or mainly for the carriage of passengers or having to the rear of the driver's seat roofed accommodation lit by side windows and fitted with or constructed or adapted for the fitting of seating for passengers, other than vehicles comprised in any of the following paragraphs of this Group:—



(i) mechanically propelled vehicles of a retail value of more than one thousand two hundred and eighty pounds the vehicle
Second.


(ii) other mechanically propelled vehicles
First.


(iii) vehicles not mechanically propelled
First.


(b) Bicycles and tricycles (whether mechanically propelled or not) constructed or adapted solely or mainly for the carriage of passengers
First.


(c) Ambulances, invalid carriages and perambulators



Tramcars, trolley vehicles and other vehicles constructed to carry not less than twelve passengers.



Vehicles of not less than 3 tons unladen weight.



Prison vans and fire tenders.



Caravans.



Vehicles of the following descriptions in which the accommodation for carrying passengers is only incidental to the use of the vehicle for other purposes:—



bullion vans;



mobile cinemas, sound film production vehicles and similar vehicles:



mobile canteens, mobile clinics, travelling libraries, travelling shops, travelling show rooms and similar vehicles;



mobile printing presses and other mobile workshops;



pantechnicons and horse boxes;



hearses but not including hearsettes;



tower wagons, road construction, road cleansing, road watering, refuse collecting and similar vehicles
Exempt.

24. Purchase Tax (Drugs, Medicines, etc.)

Resolved:
That as from such date after the passing of this Resolution as Parliament may determine, the rates and incidence of purchase tax shall be varied so as to give effect to—

(a) amendments as to tax chargeable in respect of drugs and medicines; and
(b) amendments as to the activities to be treated for the purposes of purchase tax as manufacturing goods."

INCOME TAX

25. Charge of Income Tax

Resolved:
That—

(a) income tax for the year 1948–49 shall be charged at the standard rate of nine shillings in the pound, and, in the case of an individual whose total income exceeds two thousand pounds, at such higher rates in respect of the excess over two thousand pounds as Parliament may hereafter determine;
(b) subject to the provisions of any Acts of the present Session relating to gas or to agriculture, and to any enactment which has effect only after the end of the year 1947–48, all such enactments as had effect with respect to the income tax charged for that year, other than enactments which by their terms relate only to tax for that year, shall have effect with respect to the income tax charged for the year 1948–49.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

26. Higher Rates of Income Tax for 1947–48

Resolved:
That income tax for the year 1947–48 shall be charged, in the case of an individual whose total income exceeded two thousand pounds, at the same higher rates in respect of the excess over two thousand pounds as were charged for the year 1946–47.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

27. Personal Reliefs

Resolved:
That—

(a) in Subsection (1) of Section fifteen of the Finance Act, 1925 (which, as amended by subsequent enactments, provides for a deduction of tax on an amount equal to one-sixth of the amount of earned income but not exceeding two hundred and fifty pounds) and Subsection (2) of the said Section

fifteen (which, as amended by subsequent enactments, provides, in a case where an individual or his wife has attained the age of sixty-five years and his total income does not exceed five hundred pounds, for a deduction of tax on an amount equal to one-sixth of his income) the words 'one-fifth' shall be substituted for the words 'one-sixth' and the words 'four hundred pounds' shall be substituted for the words 'two hundred and fifty pounds';
(b) in Section eighteen of the Finance Act, 5920 (which, as amended by subsequent enactments, provides, amongst other things, that the deduction of tax allowable in the case of married persons shall in certain cases be increased by an amount not exceeding five-sixths of the earned income of the claimant's wife) the words 'four-fifths' shall be substituted for the words 'five-sixths';
(c) in Section nineteen of the Finance Act, 1935 (which, as amended by subsequent enactments, provides that where the total income of an individual does not exceed one hundred and twenty pounds he shall be exempt from income tax and that where the total income of an individual does not exceed one hundred and thirty-five pounds his tax shall not exceed one-quarter of the excess of his total income over one hundred and twenty pounds) the words 'one hundred and thirty-five pounds' shall be substituted for the words 'one hundred and twenty pounds', the words 'one hundred and sixty pounds' shall be substituted for the words 'one hundred and thirty-five pounds' and the words 'three-tenths' shall be substituted for the words 'one-quarter':
Provided that the additional relief afforded by this Resolution for the year 1948–49 shall not affect the amount of tax deductible or repayable before the sixth day of July, nineteen hundred and forty-eight.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

28. Reduced Rate Relief

Resolved:
That—

(1) In Subsection (2) of Section forty of the Finance Act, 1927 (which, as amended by Section seventeen of the Finance (No. 2) Act, 1945, provides, in effect, for tax being charged at one-third of the standard rate on not more than fifty pounds of a person's income and at two-thirds of the standard rate on not more than another seventy-five pounds thereof) a reference to two hundred pounds shall be substituted for the reference to Seventy-five pounds;

(2) The said Subsection (2), as amended by the preceding provisions of this Resolution, shall, where the income of a person includes both earned income of his wife and other income available for relief under the said Subsection (2), have effect subject to the following provisions—
(a) Where there is earned income of the wife available for relief under the said Subsection (2), references to fifty pounds plus the amount of the earned income so available, or to one hundred pounds, whichever is the smaller, shall be substituted in the said Subsection (2) for the references to fifty pounds:
Provided that where the other income available for relief under the said Subsection (2) falls short of fifty pounds, the amount references to which are to be substituted as aforesaid under this sub-paragraph shall be diminished by the amount of the deficiency; and
(b) Where the earned income of the wife available for relief under the said Subsection (2) exceeds fifty pounds, a reference to two hundred pounds plus the amount of the excess or to four hundred pounds, whichever is the smaller, shall be substituted in the said Subsection (2) for the reference to two hundred pounds:
Provided that where the other income available for relief under the said Subsection (2) does not exceed fifty pounds, this subparagraph shall not apply, and where the said other income exceeds fifty pounds and falls short of two hundred and fifty pounds, the amount a reference to which is to be substituted as aforesaid under this sub-paragraph shall be diminished by the amount of the deficiency;

(3) In this Resolution—

(a) the expression 'earned income' in relation to a wife, means earned income treated as such for the purposes of Subsection (2) of Section eighteen of the Finance Act, 1920 (which provides a special relief for wife's earned income);
(b) references to the earned income of the wife available for relief under Subsection (2) of the said Section forty shall be construed as references to her earned income less—

(i) so much of any amount which falls to be deducted under any of the provisions of the Income Tax Acts as could not have been deducted but for the existence of the earned income of the wife; and
(ii) so much of the amounts tax on which falls to be deducted under Subsection (1)

of the said Section forty as could not have been taken into account but for the existence of the earned income of the wife; and
(iii) any deduction allowable under Section twenty-seven of the Finance Act, 1946 (which allows relief for national insurance contributions) in respect of contributions paid by the wife as an insured person;
(c) references to the income available for relief under Subsection (2) of the said Section forty, other than earned income of the wife, shall be construed as references to to the man's total income other than earned income of the wife, less the total of the amounts, tax on which falls to be deducted under Subsection (1) of the said Section forty, other than so much of those amounts as fall to be deducted from the earned income of the wife in ascertaining the earned income of the wife available for relief under Subsection (2) of the said Section forty;

(4) The additional relief afforded by this Resolution for the year 1948–49 shall not affect the amount of the tax deductible or repayable before the sixth day of July, nineteen hundred and forty-eight.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

29. Expenses, etc., of Directors, Employees and others

Resolved:
That where—

(a) a body corporate, unincorporated society or other body makes any payment in respect of expenses to, or provides any money or any benefits or facilities in kind for, any director, any person taking part in the management of its affairs or any employee; or
(b) an individual or partnership carrying on a trade, profession or vocation makes any payment in respect of expenses to, or provides any money or any benefits or facilities in kind for, any employee,
the payment, money, benefits or facilities shall, in such manner and to such extent as may be provided by any Act of the present Session for giving effect to this Resolution, be taken into account for income tax purposes as perquisites of the office or employment of the director, person taking part as aforesaid or employee.

30. British Electricity Authority and Electricity Boards

Resolved:
That the Income Tax Acts shall, in relation to the British Electricity Authority and


any Area Board established by or under the provisions of the Electricity Act, 5947, have effect, and be deemed always to have had effect, subject to the following provisions—

(a) any trade or business carried on by any such Board shall be treated as if it were part of the trade or business carried on by the said Authority;
(b) subject to the provisions of paragraph (c) of this Resolution, any property, rights or liabilities of any such Board shall be treated as property, rights or liabilities of the said Authority, and anything done by or to any such Board shall be deemed to have been done by or to the said Authority;
(c) any rights, liabilities or things done—

(i) of, by or to the said Authority against, to or by any such Board; or
(ii) of, by or to any such Board against, to or by the said Authority or any other such Board,
shall be left out of account,
and income tax shall be charged accordingly, and the obligations of the said Authority as respects income tax shall be included and be deemed always to have been included among the obligations contributions towards the satisfaction of which may be required from the said Boards under section forty-one of the Electricity Act, 1947.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

31. Double taxation agreement with Government of Eire

Resolved:
That the agreement between the United Kingdom Government and the Eire Government amending the agreements set out in the Second Schedule to the Finance Act, 1926, and the Fourth Schedule to the Finance Act, 1928, a copy of which was laid before Parliament by command of His Majesty in the month of August, nineteen hundred and forty-seven, shall be confirmed and shall, subject to confirmation by the Oireachtas of Eire, have effect accordingly.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

MISCELLANEOUS

32. Special Contribution

Motion made,
That where the total income of an individual for the year 1947–48, ascertained as Parliament may determine, exceeded two thousand pounds and his investment income for that year, ascertained as aforesaid,

exceeded two hundred and fifty pounds, there shall be charged a special contribution in accordance with the following Table, together with interest from such time as Parliament may determine:

TABLE


For every pound of—



s.
d


the first two hundred and fifty pounds of the excess of his investment income over two hundred and fifty pounds
2
0


the next five hundred pounds of the excess
4
0


the next thousand pounds of the excess
6
0


the next three thousand pounds of the excess
8
0


the remainder of the excess
10
0

Mr. Sidney Shephard: On a point of Order. Before the Question is put may I ask if the contribution is on the net amount of the money received? There is no mention of that.

The Chairman: I am sorry, but, according to the Standing Order, Debate is not possible at this stage. With one exception all the Motions have to be put forthwith without Debate.

Question put, and agreed to.

33. Profits Tax

Resolved:
That the extent and incidence of the Profits Tax (for past and future chargeable accounting periods) shall be varied so as to give effect to amendments affecting the computation of profits or losses or the transactions to be treated as distributions to proprietors or affecting the treatment of the British Electricity Authority and Area Boards established by or under the provisions of the Electricity Act, 1947:

34. Relief from double death duties

Resolved:
That effect may be given to arrangements between His Majesty's Government in the United Kingdom and the Government of any territory outside the United Kingdom, the laws of which do not provide for a duty similar to estate duty, with a view to affording relief from double taxation in relation to estate duty payable under the laws of the United Kingdom and any duty leviable on, or by reference to, death imposed under the laws of that territory, so far as the arrangements provide for determining the place where any property is to be treated as being situated for the purposes of estate duty; and the arrangements to which effect is given may include provisions as respects deaths occurring on or after the seventh day of April, nineteen hundred and forty-eight, and provisions as to property which is not itself subject to double duty.

35. Estate Duty

Resolved:
That, for the purposes of estate duty and as respects persons dying on or after the seventh day of April, nineteen hundred and forty-eight, property passing on the death of the deceased shall be deemed to include—

(a) money received under a policy of assurance effected by the deceased on his life and wholly or partly kept up out of money comprised in or arising under a settlement made by the deceased; and
(b) money received under a policy of assurance effected on the life of the deceased under a settlement made by the deceased."

36. Amendment of Law

Motion made, and Question proposed,
That it is expedient to amend the law with respect to the National Debt and the public revenue, and to make further provision in connection with finance."—[Sir S. Cripps.]

6.0 p.m.

Mr. Churchill: Whatever we may think about the Budget proposals and the general financial situation—and on that point no doubt diverse opinions will be entertained in the different quarters of the Committee—I expect there will be general agreement that the Chancellor of the Exchequer has delivered a comprehensive, lucid statement. Very few words were wasted and the whole vast, complicated panorama of facts and figures appeared to be approached in a spirit of careful analysis and embracing design. It was refreshing to hear a statement of this kind, apart, that is to say, altogether from its substance. We must always remember, in judging the right hon. and learned Gentleman, that the inheritance to which he succeeded so unexpectedly, although it was not subject to new and penal rates of taxation, was at any rate one which did not contain only agreeable features. He is the heir of policies which have been much criticised and are accused of having notably emphasised the danger of inflation and have been accompanied undoubtedly by an ever-declining strength in the purchasing power of money.
The right hon. and learned Gentleman, therefore, is entitled to every assurance that his proposals will receive careful, precise, thorough and searching attention. We have the advantage also of dealing not only with the Chancellor of the Exchequer, but with the overlord of our

economic life. I do not know that the burden of the two offices combined is necessarily much greater than if they were divided; probably more can be done in solving problems when they are all under one's own hat than when time has to be taken up in adjusting difference and difficulties with opposite numbers. The right hon. and learned Gentleman has at any rate the advantage that the whole field is at his disposal.
I have thought it right to thank him for the full account he has given in a speech quite worthy of Budget occasions, in which the Committee always takes special interest. I feel sure that his precise mind and careful legal training will enable him to carry through the detailed discussion and Debates upon this Bill in the same competent manner which has marked his first unfolding of his proposals to the community. It is not my intention now to enter upon any discussion of merits. We wish to have the opportunity of thinking very carefully over what has been said and endeavouring to apply our minds to the problem as a whole, as well as to its special circumstances. There are, of course, great questions to be borne in mind, and the gravity of the situation admits of no difference of opinion in any part of the House. It is indeed, a situation of extreme gravity when a country so strong and proud as ours cannot pay its way and has to lean upon the good offices of a free and generous nation for a large proportion of its actual upkeep. We cannot and are not paying for our keep and our livelihood at present.
There are also all those grave financial issues which have been touched upon, and the question is whether the policy which the right hon. and learned Gentleman has put before us constitutes the best method of remedying these evils. This problem of "Too much money chasing too few goods," or the question of killing money wherever possible and destroying spending power, sounds all very strange to those who remember the days when we heard so much about increasing the consuming power and allowing money to fructify in the pockets of the people. All that has apparently passed away and there is a school of economists who believe that restriction, frustration, regulation and taxation of every kind e re the prime reagents by which the wealth of nations may be created. These are


matters which we shall have to consider not only in their financial, but in their economic aspect in the Debates which will take place, and which will be long, upon the general principles of the Budget.
There are the questions also of the great surplus of over £300 million which the right hon. and learned Gentleman has presented; of whether greater advantage would not be gained by giving further relief to the taxpayers; and whether the present rates of taxation are not onerous in the very last degree. When Chancellors get up nowadays they give away a few minor items this way and that, and parade and preen themselves as great benefactors of the public. It must not be forgotten that the whole of the vast mass of pain§ and penalties under which we totter today was accummulated through the national struggle of the war. It was never contemplated that the expenditure of over £3,000 million should roll forward in time of peace. Such ideas must be carefully probed and examined.
The only other remark which I would venture to make is one which is not of a general character. The right hon. and learned Gentleman unfolded his plan for a capital levy. He avoided the name but he unfolded his plan for a once-for-all levy on capital. How can he say it will be a once-for-all? It does not rest with him.

Lieut.-Colonel Lipton: It rests with the Government.

Mr. Churchill: I do not know that the hon. and gallant Member can speak for the Government. He must allow them to speak for themselves and adjust their policies to the ever-changing, varying problems and circumstances of every day. This seems to me a very serious proposition and it may well defeat the objects which it has in view. Generally speaking, I doubt very much whether the right hon. and learned Gentleman's Budget will be found to meet the real difficulties or to apply the right remedies. On the other hand, I feel that it is only right to compliment him on the manner in which he has presented it.

6.10 p.m.

Mr. Norman Smith: I think that the right hon. Gentleman the Member for Woodford (Mr. Churchill) must have felt a certain amount of envy

when he referred to my right hon. and learned Friend as being not only the Chancellor of the Exchequer, but also the overlord of our economic life. When the right hon. Gentleman introduced his Budgets, he was not the overlord of our economic life. He had to reckon with an overlord who was domiciled in the City of London and who was, in fact, Governor of the Bank of England. We are no longer working under the conditions of the Budgets of as long ago as 1925. My right hon. and learned Friend is, in fact, overlord, and he has no excuse for the harm he is doing in this Budget. There are some very grave and serious blots on this Budget. I resent in particular the increase in taxation on beer and tobacco. There is no need for this increase of taxation. Why should the innocent amusements of the people, which are already taxed far more than they need be, have to be subject to these added impositions?
My right hon. and learned Friend is going to an appalling amount of trouble to achieve' a comparatively small result, which will be obtained in any case. The amortisation of some £300 million is to be achieved 1537 all this juggling of figures, but, surely, Marshall Aid is now a certainty in the ensuing year, as a result of which we shall get some £300 million. If my right hon. and learned Friend does what he ought to do, there will be a pro tanto amortisation in any case of rather more than £300 million. My right hon. and learned Friend did not say what he contemplated doing with the Marshall Aid, which will automatically achieve the results which he proposes to achieve by all this tremendous interference with the pleasures of the people. There is a major fallacy underlying the arguments of my right hon. and learned Friend. He talked about inflation, but he did not prove anything. I would argue that either there is no inflation, or, if there is inflation, it is not due to the incomes of the working classes. The incomes of the working classes are not inflationary.
If there is inflation, it is obviously the result of our immense National Debt of £25,000 million, to which no reference was made in the long speech we have just heard. When I was a boy, the National Debt was £600 million. At the end of World War 1, it was £8,000 million, but now it is £25,000 million and nothing has been said about it in this


wide and comprehensive review of our national finances. Certainly there were no proposals for getting rid of the National Debt, or at least for getting rid of part of it, mitigating the appalling burden and the inflationary influence it represents. I suggest that my right hon. and learned Friend should have an inquiry into the National Debt for the precise purpose of finding out exactly how many units of that Debt represent money really lent, and how many units represent mere creations of credit out of nothing. I believe it is true that something like a quarter of the Debt—I am including floating as well as funded debt—never had any more substance than the ink in the fountain pens of the bankers. Most of this Debt was created during the war, and we still have its effects with us. What are the objections to having an inquiry into the composition of the National Debt? Why not ask the alleged lenders to prove their bona fides? If anyone really has parted with money, and lent it to the Government, the Government will obviously honour their obligations; but if the lender did not part with any money, there is no reason under heaven why the obligation should be honoured.
It is a complete fallacy to propose that to the extent that the Government undertake capital works, the cost of these works must he taken out of the people's current incomes. If that were true, it would be equally right to argue that private investment in private enterprise should come out of the investors' current incomes. The fact is that, to the extent that private enterprise extends its business, it is paid for very largely from funds which have been accumulated in the past, or by bank loans, which are merely a form of created credit with no more substance than the ink in the fountain pens of the bankers. Why does my right hon. and learned Friend insist that, for every pound spent on Government capital expenditure, there must be a pound taken out of the current income of the people, especially when he does not propose the same thing in the case of private enterprise, where, of course, it could not be done? There is no logic in his argument.
The right hon. Gentleman the Member for Woodford referred to the Chancellor of the Exchequer as being the overlord of our economic life. He is indeed the overlord of our economic life, and in devising this fantastic Budget he has fallen into the same trap as the Leader of the Opposition fell into in 1925, when he took the advice of the experts and then six years later admitted that he had been wrong. I believe that my right hon. and learned Friend will also admit at some time in the future that he has been wrong in taking this course. There are good features in the Budget, but I do not propose to discuss them. I protest against the increase of taxation on beer and tobacco, which is absolutely unjustifiable. I resent the failure of my right hon. and learned Friend to mention anything about the savings campaign, which, as we all know, was a flop last year because people simply will not risk their savings unless they are sure the pounds they eventually draw out will be worth at least as much as the pounds they put in.
I suggest that the Chancellor of the Exchequer should abandon the orthodox pretence that money can perform two functions, namely, that of a store of value and that of an instrument of exchange. We have had a succession of orthodox Chancellors of the Exchequer ever since I was interested in politics. The result has been that the country has got into debt to a greater extent than ever before. Every baby born in the country today finds itself automatically in debt to the extent of £500. I hope that the Chancellor will tell the Committee what he proposes to do with the proceeds of Marshall Aid, which will provide this £300 million without all the fuss of getting it in any other way. Does he propose to do nothing about the National Debt, in which case things will continue to go from bad to worse?

Ordered: "That the Chairman do report Progress, and ask leave to sit again."—[Mr. Joseph Henderson.]

Resolutions to be reported Tomorrow; Committee report Progress; to sit again Tomorrow.

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Joseph Henderson.]

Orders of the Day — PRINCES HOTEL, HOVE (REQUISITIONING)

6.18 p.m.

Mr. William Teeling: We have listened so long to the Budget that it is a little bit of a strain to switch over to a completely different subject. The Adjournment Debate comes under the heading of "The Princes Hotel, Hove," but that is only part of the subject with which I wish to deal. I am more concerned with the future than the past. I am fully aware that this hotel has been lost for ten years. It has now been taken over by the Electricity Board. Had I known more about this earlier in the year and had the sale been less secretly arranged, it is quite likely that we would have been able to stop it.
It was suddenly announced in the Press that the local council were about to discuss this matter, but it had been frequently discussed in private with members of the council, about which we knew nothing. Finally, when I brought this matter to the attention of the House, the different Ministers, to whom I hoped this matter might be one of great concern, announced that it had really nothing to do with them at all, because it was a question for the Electricity Board. We have already discussed in this House the question of the advisability of handing over to these boards responsibility for what Ministers call "details." I do not think we have yet heard what "details" involve. I do not think this is a party issue; I am inclined to think that it may affect all parties as the years come and go, no matter who comes into power. Everyone will want to know what exactly a board can or cannot do.
The particular question I am trying to put before the House tonight is how these boards are slowly but surely taking over property which could very well be used for other purposes, particularly for housing, and whether it can be stopped. The housing problem affects not only my constituency, but almost every other in the country. My constituency in particular, Brighton and Hove, lives almost entirely by catering for the holiday visitor, for the tourist, and generally on entertainment. It may well be that other con-

stituencies will be affected by the taking over of their main industry for use by one of these nationalised boards. What is the Government's policy in this matter? Shall we find ourselves in a position where, after some Ministers have washed their hands of what the boards do, those boards will take over property which is vital to an industry which another Minister is working hard to develop?
I speak with particular reference to the holiday industry in Brighton and Hove. We are all agreed that we want to obtain dollars from the tourist at present; that we want people-to come to this country from the United States and other hard currency areas and, to a certain extent, from other parts of the world as well. Brighton and Hove are centres that are very well known, not only throughout this country but throughout Europe and the United States. They are known for their Regency architecture, and their historical background. There was a time when America herself was developing this particular type of architecture. After the war, we tried to get our hotels freed and sufficient furniture for them so that they could welcome people from abroad. To a certain extent we have succeeded. I do not think it would be unfair, or an exaggeration, to say that of all the hotels in Hove the best known one is, and always has been, the Princes Hotel. It is famous not only in this country, but abroad. It may be within the recollection of some Members that during the last few months several of us visited Japan. While there the Emperor's brother, at a luncheon party, asked what had happened, during the war, to the Princes Hotel at Hove. He had come over for the Coronation, and, whether it was the Royal Family or the Foreign Office I do not know, but somebody had told him that the best hotel he could stay at for a short visit was the Princes Hotel at Hove. It is not only in Japan but also in America that this hotel is well known.
Over a long time valuable goodwill was built up, and that is why I am particularly worried about this matter. The board are coming into the place and moving into an industry which is vital to our dollar position. The board are taking over properties without adequate attention being paid to what they are doing by the different Ministries. I feel that there must have been a lack of planning and co-ordination


in this matter. When trying to encourage the tourist traffic the best hotels should be developed. If these boards are to be allowed to run their own show in detail it is possible that they may take over property in different parts of the country that could be better used for some other purpose—such as earning dollars.
The Minister of Fuel and Power answered a Question of mine before the Recess, when he said that he had given no instructions whatever to any board about taking over property that could be used for housing purposes. I did not pursue the point with him, as I felt it was a little unfair because the Table had refused to allow me to point out why I was asking the Question. I was asking it as a supplementary to one which I had put earlier to the Prime Minister. The Question I put to the Prime Minister was:
… what is the policy of His Majesty's Government with regard to the purchase by Departments of properties which can be shown to be capable of being used for housing purposes; and if he will direct the Ministers concerned to impose that policy on the Nationalised Boards for which they were responsible.
The Prime Minister replied:
In view of housing needs the Government are anxious that accommodation capable of being used for housing purposes should not be purchased by Government departments and other bodies and used for other than housing purposes where this can be avoided.
I would like the House to remember the word "avoided." The right hon. Gentleman went on:
Defence Regulation 68C.A. covers this"—
that regulation says that the prior consent of the local authority must be obtained—
by providing that consent must be obtained to the diversion to other purposes of any housing accommodation which has been so used any time since 31st December, 1938, and this extends to hotels and similar accommodation. The Regulation applies equally to nationalised industries and to private individuals, and the present arrangements should ensure that such accommodation is used for living purposes where this is practicable."—[OFFICIAL REPORT, 8th March, 1948; Vol 448, c. 786.]
Later, I asked the Minister of Fuel and Power whether he had given any instructions to his Department on those lines, and he replied: "No." I would like to ask the Parliamentary Secretary if he would explain why that is so? If the Prime Minister definitely says that it is the

policy of the Government that housing should come first, why are these nationalised boards at least not advised, if not indeed ordered, that they must leave housing property alone as far as possible? I know the answer will be, as the Prime Minister said, that in the case of the Princes Hotel "the local council accepted this proposition." But, on the main issue, I would like to know exactly what the Ministry can and will do in future, because it is to the future that I am looking. What are the Government going to do with regard to the housing problem as a whole?
I think that the country ought to know something about the way in which the Princes Hotel has been taken over. We are told that the council agreed to this. That is not entirely true. The council did in public agree to the whole question by a considerable majority, and when it was brought up again, after it had been aired by me, they again agreed to the proposal by a majority, one of the aldermen saying that they would be made a laughing stock if they altered it now. Certain members of the council pointed out that had they known the details, they would not have consented in the first instance. They said that they were not properly informed about it, and that they did not know hat the property could not be requisitioned. I would like the Parliamentary Secretary to explain more clearly to the country as a whole that property cannot be requisitioned for these purposes without the councils agreeing according to Defence Regulation 68CA. I cannot find in any of the documents which I have here, any statement that the council was warned on this point.
Let us see how it all began. I know that the hon. Gentleman's Department have been in touch with the Hove town clerk, so that the Parliamentary Secretary might reply to me as to what happened. I know that the Electricity Board made a statement in the Press, to which I replied in "The Times." I think that the answer which they have been given is that according to the Local Government Act the council acted absolutely correctly, that the whole thing was done in public and was done properly. That is not, if I may say so, absolutely true. A lot happened before the council met in public. For instance, there is the town clerk's report dated January, 1948, which


refers particularly to a meeting on Friday, 2nd January, when a Mr. Burnell, the clerk of the London and Home Counties Joint Electricity Authority, visited the Mayor and Town Clerk. He pointed out that he had come on behalf of the Chairman of the South Eastern Electricity Board, which had been considering the purchase of offices for its headquarters' staff. He told them that there were a number of places in which they were interested, including the Princes Hotel, and he went on to say—and this is in the Town Clerk's report—that the Board would not come to a decision except with the full agreement of the local authority concerned, and that the chairman had asked him to find out the reactions of the whole council to the suggestion that the Board should set up headquarters in the Princes Hotel. Then comes the remark:
It might be that the Board could requisition the premises and avoid the question of the consent of the local authority.
Mr. Burnell stresses that whatever might be the legal position they did not intend to do anything of this nature. That would seem to be in the nature of a threat of requisitioning. I have here a letter from one of the people who sold the property. The last paragraph says:
So far as the owners of the hotel are concerned, it is indeed difficult to 'negotiate' with a prospective purchaser who is armed with powers of compulsory acquisition
That letter is dated only 1st April. The council it seems pointed out that for some time past they have been interested in developing Hove, and that they had been pressing for the Princes Hotel to be reopened; that only within that last week an approach was made to the hotel on the matter, and they had been informed that it was unlikely that the hotel would be re-opened before Christmas, 1948. Remember that date; it could be opened by Christmas, 1948. It has been empty for the last two years. Tenders had, I believe, been invited for the necessary work which would take at least nine months to carry out after the tender had been accepted. Mr. Burnell said that the Board had made inquiries, and they "thought it exceedingly unlikely that the premises would ever again be opened as an hotel." That raises another point. No one knows who "they" are; and who says that the premises will never be opened as an hotel? They say that they

have had expert opinion and that the Brighton and Hove area was more than sufficiently provided with hotel accommodation. Yet, when we come to the summer season, people are being turned away because it is impossible to get into the hotels, especially at the weekends. So that statement is entirely untrue.
These experts also state that the premises are not suitable for use as a modern hotel without considerable structural alteration, and that apart from proposals put forward by the Board the premises would remain empty for many years. I feel that there is no reason why that should be so. While the premises were empty the local authority was losing a considerable amount in rates. So it was pointed out to the council that under the Local Government Bill now before the House of Commons it was provided that the hereditaments occupied by the Electricity Boards, except premises used as a dwellinghouse, would not be rated or included in the valuation list, bill the British Electricity Authority would make a payment year by year for the benefit of local authorities.
With this background the council were invited to do what they could and make up their minds. Then, as the hon. Gentleman will remember, we had the statement in the Press from Mr. Norman Elliott. We all know what good work he did during the war. But what did Mr. Elliott do over this matter? He came down to see the council and met them after a General Purposes meeting. They had already finished the meeting, and there was nothing on the agenda about this. The Press were asked to leave, and this matter of great importance was discussed privately and out of the blue. It was in December when Mr. Norman Elliott walked in, and I understand from the council that he informed them that he did not know what he was expected to say. He told them all about where he had been to school, what a good rugger player he was, and got all the members of the council interested, so that in the end they finally adopted this really ridiculous proposition for Hove.
At the next meeting, the mayor said that, having gone so far, they could not go back. Finally, it was agreed that they would let the Electricity Board take the property. They were rushed into it. Then the resolution was put for the first


time in public. At the request of the Electricity Board it was proposed to add strengthening words to it to say that the council welcomed the proposal. On 9th January Mr. Elliott in a letter said that, briefly, the proposal was that the South-Eastern Electricity Board, which would be responsible for the electricity supply in Kent, Surrey and Sussex, should purchase Princes Hotel and make it the headquarters of the Board. The headquarters would house the Board's secretariat and senior officials and would also probably be the headquarters of the consumers' council for the area. The fifth and sixth floors, and possibly the fourth floor would be made into residential premises for the headquarters staff. He went on to say that if there were any surplus office accommodation he would be most happy to enter into negotiations with them. He also said:
I am fully conscious that your council would wish to preserve the pleasant amenities of the Hove sea front and I can assure you that Princes would be kept in first class condition and that all the reasonable requirements of your council in this respect would be a first consideration of the Board. Should the Board's headquarters come to Hove, this would also bring to Hove many most desirable ratepayers and I am sure that the most happy relations would exist between the Board and your council. From the information I have it seems probable that if my Board does not take the Princes Hotel the building may go derelict and this, of course, would be most undesirable for Hove.
All this is just part of a series of threats and bullying. The actual position is that we have a town which has 2,000 people without homes and of the 2,000 on the housing list 1,000 are really extreme cases of urgency. Why was it not possible to put some of these families into the Princes Hotel if it is not possible to turn it into an ordinary hotel? I, personally, cannot see why that could not be done.
There are two avenues of approach from the hotel into the centre of the town. The Electricity Board have taken two large houses attached to the hotel to house people who perhaps are considered to be desirable ratepayers, yet some six or seven houses in those particular avenues have already been taken over by the local council to house local people. Why could not they have also had these two houses? I am informed that over 200 people are going to move into homes in Hove in order to take part in the workings of the Electricity Board. We have had quite good enough service as it was before, and

where the boards are at present situated they have found plenty of room to work. Why is it now considered necessary so greatly to increase the premises? The answer is that they are taking over the areas of Kent, Surrey, Sussex, and it is the tendency of bureaucracy vastly to increase the number of people at the head of affairs. Several of the undertakings which are being taken over have had their headquarters in London. These headquarters are now being sold and the people working in them are to move into Hove. How is that going to help the people in Maidstone and Tunbridge Wells who were so well served before? If a central office is wanted, why not have it in London?
I maintain that the only reason is because someone likes to be going to Hove. It is rather pleasant to be at the seaside and Hove is rather a pleasant seaside to be at. I can hear someone saying, "To hell with the 2,000 people there who want homes! Why should we be bothered about that?" That is the new bureaucracy which is coming in. I do not understand how a Socialist Government or indeed any Government could defend this present action. We have heard the Minister of Health saying that there are not nearly sufficient houses at present to house all those in need of homes. Yet here is an hotel, which could be used for the purposes of conversion into a block of flats, being used to accommodate the staffs of this new Electricity Board. In Hove, too, there are old people who are in large houses and would be much better off in flats where they would not have to use stairs to the same extent. They would gladly get out of their houses if they could get flats, and those houses could be used to accommodate some of the local families who are in such need of accommodation. Why cannot something like that be done?
If the answer is that this is a question for the local authority I do not agree, because on more than one occasion, when the local council wanted to requisition local property, the Ministry of Health prevented them taking over houses. The Ministry, when I asked a Question, said that other people from outside were going to move into the property. Therefore, the Ministry of Health, if they wanted, could take an active part in this matter and do something about it. We are left


at the present moment with the position that an hotel, which could have been taken over to house something like 6o families, is being requisitioned to provide accommodation for the new staff of this Board. It is said that 200 families are going to move into the town of Hove, which has its housing difficulties without this new addition to the local inhabitants. They may be desirable, wealthy, better class people, but they are coming in ahead of all others.
The local council to my mind has been pushed into this thing. It was done secretly at the start, but why I cannot make out. There has been a certain confusion. We have been told by the papers that there was nowhere else for this headquarters to go to, but others have informed us that there were other places where it could be accommodated with much less inconvenience, and with a great saving of money to the nation as a whole, whereas in this instance the amount of money that has got to be spent on this place to put it right for these civil servants will be very considerable and when we take into account the money that the Admiralty spent previously, there will be really no worthwhile saving at all. We have also to remember that the taking of this hotel is damaging the main industry of the town of Hove.
There seems no reason why the Board should not remain where the branches always were before or why it should not have gone to London as a centre. The whole thing is now signed and sealed, and it may seem rather late for me to raise it. However, it is not my fault that I was unable to raise this matter on the Adjournment earlier. I have to ballot for it. I have already pointed out that this is not a political issue. It is going to affect any Government which comes into power no matter what Government it is. Whatever Government is in power must see that these Boards do not proceed contrary to the policy laid down by the Prime Minister. In this particular case it is the policy in relation to housing. Another time it might be something else. We have to remember that this hotel could have been used as an hotel, or it could have been converted into flats to accommodate some of the local homeless. Already there had been several demands as to why nothing had been done to convert the building and I have raised the

matter myself by Questions to the Minister of Health. I still believe that something could have been done if energetic action had been taken by the Ministry of Health.
Although this matter may now have been signed and sealed, I am raising it because it may occur all over the country in different ways. That is why I want the Parliamentary Secretary to the Ministry of Fuel and Power to say something in regard to situations such as this. I hope he will be able to tell us that this kind of thing will not happen again, and that he will not fall back on the statement that this is a matter for the local council and that we ought not to be talking about it here. To my mind the local council were only pushed into it at the last minute and they did not know the proper facts because they were not told them by the officials of the Board.

6.48 p.m.

The Parliamentary Secretary to the Ministry of Fuel and Power (Mr. Robens): I usually listen with great interest and attention to the Senior Member for Brighton (Mr. Teeling), but I must confess that on this occasion I have listened to what is really a private feud between him and his local council. The Debate has ranged not only over my own Ministry but over the Ministries of my hon. Friends who are here on the Government Front Bench with me—the Ministry of Works and the Ministry of Health—and I am indebted to my hon. Friends for a good deal of the material that I shall use in replying to the points that have been raised.
When the Senior Member for Brighton looks at his speech in HANSARD tomorrow, or perhaps when it is suitably sub-edited in his local Press, I am afraid he will see that what he is saying is a very severe reflection upon the council as a whole, and an even worse reflection upon the abilities of the town clerk who is responsible for advising the council of the powers which it possesses. I am utterly amazed to hear for the first time this afternoon about all these apparently in-the-dark negotiations. I was a member of a fairly large municipal authority for some years, and I am certain that I would not have been a party to negotiations of the kind that have been described without saying something about it. That, again, is a matter for the council, and not for my


Ministry. The Government have given all the powers to local authorities which are necessary to enable them to do what the hon. Member has suggested. He has referred to Defence Regulation 68C (a) which was made in October, 1945. That regulation provides that no premises used for housing accommodation at any time since the end of the year 1938 may be used for other than residential purposes without the consent of the local authority or, in the case of application by a Government Department, the consent of the Ministry of Health. This was not a case of application by a Government Department.
I might interpose at this stage and say that throughout these negotiations the Ministry of Works have in no way interested themselves on behalf of the British Electricity Authority and that any statement that they have done so is quite wrong. I am sure that the hon. Gentleman will appreciate—because he sits on the other side of the House and shares the view that there should be freedom for the people of this country to please themselves fairly well—that we cannot force anybody to buy a hotel or, even if they own a hotel and keep it empty, force them to open it and take in tourists. This hotel was one of the earliest to be de-requisitioned. In point of fact it has been closed, I understand, for two years.

Mr. Teeling: There was war damage.

Mr. Robens: Nevertheless, we must remember that it was in November, 1946, that the Ministry of Works granted a licence up to £25,000 for the first phase of rehabilitation after derequisition, and that no work was put in hand. The licence lapsed. If there was no desire on the part of the owner to get busy with the tourist trade and to make the hotel habitable, once again—

Mr. Teeling: I do not think it was the same owner.

Mr. Robens: It is the same piece of property. We cannot help it if it continually changes ownership. Let us not overlook the fact that the hotel, and adjoining property presumably, have been empty, and that the council have powers to requisition the property for purposes of housing. I understand that the council were most anxious that the property should be brought back into use as a hotel. I understand that the council

gave every encouragement to the owners in their expressed intention to carry out repairs that were necessary in order that the property could be reopened as a hotel.
When the council came to consider the conversion of that particular piece of property for residential purposes for the housing of some of the 2,000 people who are, I understand, without accommodation, they did not regard its requisition and conversion into housing accommodation as altogether an economic proposition. Therefore, they did not take the action which they had full power to take in order to meet the situation which the hon. Member is asking us to deal with this afternoon. The council has all the powers; the hotel has been empty for two years. The council could have done precisely what the hon. Gentleman is asking should be done.
I will turn to the question whether the council were under the impression that if they did not give consent to the British Electricity Authority to obtain the hotel, the property would have been requisitioned. I can find no evidence for that. Again, it really is a gross reflection upon the town clerk, who must have some responsibility in this matter. He should know the law in respect of requisitioning. He would know quite well that the British Electricity Authority is a public corporation and stands in the same relation to this as any other enterprise of that character stands, and has no special powers to requisition.
I cannot say anything about the argument that may have taken place in the very interesting interview behind locked doors, and I have not troubled to find out anything about it. It is not our business to interfere in the day-to-day administration of the British Electricity Authority. If it had been a private company wanting these premises for a similar purpose it would not have been possible to secure private information of negotiations. My right hon. Friend the Minister of Fuel and Power feels that the purchase of this hotel is not a matter that comes within the power which he has under the Act in relation to direction.
Therefore, while it has been most interesting to learn this afternoon of all the negotiations which took place, those negotiations were between a public corporation and the local authority. The local authority had all the power they wanted to


please themselves whether they granted permission for the new use of that property. They decided, as a council, that they would agree, as the planning authority, to the new use to which the British Electricity Authority wanted to put it. I cannot understand why this Adjournment Debate has taken place at all. It is not on a matter with which Parliament is concerned at all at this stage. Parliament has already delegated powers to the local authorities to deal with the matter to which the hon. Gentleman has referred.

Mr. Teeling: Has not the Ministry of Health also power?

Mr. Robens: Of course, the Ministry of Health has powers, but they are negative. They are not positive in the sense that the Ministry can go to the council and say, "You must requisition this property and turn it into houses." The Prime Minister made a statement, to which the hon. Gentleman has referred. The statement applied not only to public corporations but to all people in business of this or a similar character who wish to acquire premises. The British Electricity Authority, along with all other firms, would take note of what has been said. While the hon. Gentleman has given us a lot of information this afternoon, there is nothing he has said that he ought not to have said to the council. He should really have been making his speech to the council and telling them that they had not done their job, if that is what he feels about it.
Regarding the acquisition of this property by the British Electricity Authority, I repeat that it is a matter of day-to-day administration. We have no intention of using our powers under the Act to give directions on a matter of this character. The area boards of this undertaking must be left as free on these matters as is any other business, private or public. It is clear that the council, having all the authority to deal with this type of business transaction, exercised their powers. They are guardians of the powers that they possess in the interests of the ratepayers and of their citizens. Whatever they may have done is a matter between them and the citizens of Hove. The speech made by the hon Gentleman ought to have been made to the council and not to this House.

Orders of the Day — OIL SUPPLIES

7.0 p.m.

Mr. Erroll: I sincerely hope that I shall obtain from the Minister, on this subject a more helpful and co-operative answer than my hon. Friend the Member for Brighton (Mr. Teeling) has had. I wish to raise the very serious question—

Mr. Speaker: I must remind the hon. Member that the Minister may only speak again by leave of the House. He has already spoken on the Question, "That this House do now adjourn," and his right of answering is exhausted unless the House gives him permission.

Mr. Erroll: Thank you for your Ruling, Mr. Speaker. I sincerely hope that when the time comes the House will give the necessary permission. We are entering upon a period of great seriousness in regard to oil supplies for Britain. For the first time in her history America is becoming a net importer of oil. She can use her immense dollar resources to attract such supplies as she requires from the oilfields of the world. In the face of this very serious situation, we have to secure our own supplies when we are short of dollars in what is not only a serious situation, but also one which is steadily deteriorating. The Economic Survey recently issued by the Government refers to this matter and says that there will he a period for us of very considerable shortage and difficulty. Those are strong words even for the Economic Survey.
Unfortunately, during his period of office the Minister of Fuel and Power has not given us any very striking evidence of his competence to deal with the matter of oil supplies. We know, of course, that he has been busy on nationalisation Bills and that oil supplies, except when it comes to rationing the ever-diminishing quantities, have had to take second place. I will give two specific examples of what is taking place. First of all, there was the coal-oil conversion scheme. That was started when the Minister's predecessor was in office, but he has continued it. Firms were urged to make rapid conversions of their plant from coal-burning to oil-burning. Many of those conversions were carried out speedily at the special request of the Minister. Now, barely 18 months later, many firms are being asked to convert back again to coal in view of the


shortage of oil and, incidentally, they are having to bear the cost of a double conversion.
An even more serious situation has arisen in regard to oil for ships' bunkers. There is no excuse here, because the Minister could have been warned by the deteriorating fuel oil situation for Britain of the difficulties which would very shortly arise in regard to oil for ships' bunkers. Nevertheless, it seemed to catch him unawares. It was well said at the annual meeting of the Chamber of Shipping two or three months ago, that it was not only the rising prices of oil for ships' bunkers but the uncertainty of securing supplies that was their great difficulty. One gentleman said that the outlook was sombre indeed. Some very striking figures were given regarding the cost of bunkering a Liberty ship on the round voyage from Australia via the Cape. The cost has increased since last October by no less than £5,500 to the immense figure of £18,000. That is the cost of the oil alone for the round trip. That is the way costs are going, and even with the increase in the prices, it is still very hard to know whether one can get the oil when one arrives in port. There has been very serious deterioration here and it seems that the time cannot be far distant when there will have to be some restriction on oil bunkering for ships.
Some of the difficulties facing increased oil supplies for Britain and for British ships are outlined in the Economic Survey, but an explanation of difficulties is not the same as finding a solution. I want to know what the Minister is doing to overcome the difficulties. I will outline some of the problems under three separate headings. First of all, there are the Middle East oilfields. I want to know whether we are really doing enough to get them into full-scale production. Would it not be a sound investment to spend dollars even on making special oilfield equipment available? Would it not even be worth spending dollars to obtain the machinery and other equipment? Every pound we spend in the Middle East oilfields will save dollars when the oilfields are in full production or, better still, will earn dollars or other hard currencies. It is worth while giving an over-riding priority to the factories of Britain to secure delivery of oilfield machinery and equipment to the Middle East oilfields.
The Iraq Petroleum Company have been doing valiant work over the last two years trying to double the pipeline from the fields at Kirkuk to the Mediterranean. They have been harassed by climatic and other difficulties but their greatest obstacle has been the slow delivery of supplies from Britain. Exports to these fields should have top priority even over the now popular textile drive, and that should be engaging the attention of the Government today. In another part of the Middle East there has been the lamentable spectacle of oil being pumped back into the field. The Minister recently referred to the fact that no less than one million tons of oil had been pumped back into the Anglo-Iranian fields in Persia owing to unbalance in the development of the field due to shortages of essential equipment.
The second great problem is that of tankers. Everybody knows that there is a shortage of tankers. It is referred to in the Economic Survey. Is enough priority being given to British tanker construction? Is the Parliamentary Secretary, who recently came from the Ministry of Transport, really making sure that his late Ministry is getting the tankers out of the British yards? Additional British tankers could carry dollar oil and thus earn dollar freights in addition to saving the dollars which we at present have to spend on hiring American tankers. I hope the Minister will not criticise the Americans in regard to their oil tanker policy. Many of their tankers were laid up after the war and it was not possible to release them for our routes because they were designed for the Pacific run and were not suitable for the Atlantic and other routes. I believe that in any case in their desire to help to relieve the situation, the Americans have released more tankers from carrying winter oil up the East coast of America and have made them available for foreign use.
The real bottleneck remains the question of oil refineries. The Economic Survey says that plans for new refineries will take years to mature and will be delayed. Surely that is one thing that ought not to be delayed. The provision of additional refining equipment ought to go ahead without any delay in view of the importance of oil both for us in Britain and for maintaining our balance of payments. The "Petroleum Times" in its issue of


13th March is rather more outspoken. In its leading article it says:
Already … British refinery plans, announced long ago, are so behind schedule that no company will release a "progress report.
That is a deplorable state of affairs, particularly as the sterling oil industry is making a contribution of about £100 million per annum towards the balance of payments by the oil it produces going to countries outside the sterling area. Surely in the field of refineries there ought to be no delay, particularly as much of the equipment is not of a specialised nature but could be manufactured in British factories and shipped over quickly. If only the priority were given and if only the urgency were appreciated by all those who can make the equipment for these refineries, things would go ahead much faster than they are going today.
For a nation to be short of oil can rightly be interpreted as a grave strategic weakness by any hostile Power. The shortage is quite obvious. What is not so obvious is the steps we are taking to remedy the shortage in this important field. There are great difficulties, but the public is entitled to know what is being done to overcome them. The Minister has been busy with nationalisation, and particularly with the nationalisation of the gas industry, but I hope he can now reveal a far-reaching and comprehensive programme which will satisfy Britain's future requirements.

7.10 p.m.

The Parliamentary Secretary to the Ministry of Fuel and Power (Mr. Robens): May I, by leave of the House, reply to the hon. Member for Altrincham and Sale (Mr. Erroll) and say that he has put forward his case with his usual charm and accuracy. He slipped up only when he talked about the incompetency of my right hon. Friend which, of course, I cannot accept in any circumstances, and when I have dealt with many of the points raised by the hon. Member, I hope he will see that a great deal has been done—indeed almost the impossible has been done—to deal with what is undoubtedly an extremely difficult situation. The hon. Member paid me the courtesy of advising me of a number of the points he intended to raise, and therefore I am able to give him a fairly full reply and one which I hope will satisfy him.
The hon. Member referred to coal oil conversion. I am certain that it is not his desire this evening to score political points on this important issue, and therefore I do not want to do so either. However, in 1946 when the question of coal oil conversion was first considered, he will recollect that there was a surplus of sterling fuel oil and an acute shortage of coal. Today we have a world shortage of fuel oil due to the enormously increased consumption throughout the world and, of course, we cannot accept responsibility for increased consumption in countries other than our own. The biggest quantitative increase, as the hon. Member indicated, has been in the United States of America, though from the point of view of percentage increase, the increase in this country and in other European countries has been higher. However, in fuel oil as in everything else to do with oil, the world tends to be knocked sideways by what happens in the United States of America, because that country not only produces but consumes two-thirds of the present world total oil consumption. Not only that, but the United States of America is actually consuming today more than the entire world consumption in 1938. Therefore, a small percentage variation in American consumption has a marked effect on the rest of the world.
What would the hon. Member have done if he had been in the position of my right hon. Friend; if he had been faced with those factors in 1946 of a shortage of coal and a surplus of sterling fuel oil? I think he would have done the commonsense thing and have said, "There must be conversion. The coal industry has to be given an opportunity of getting up its production capacity and, whilst we have fuel oil in surplus, we ought to use that fuel oil to save the coal because we want it for export in the quickest possible time." What did we do? We did not force coal oil conversion on to industry. The fact was that there was this great shortage of coal in industry as everywhere else and industries themselves, because they needed to keep their factories going, had an opportunity to get fuel oil to replace the coal they could not have. All that the Ministry did was to make an orderly conversion to fuel oil instead of a disorderly and chaotic approach. I am certain that if the Government had not


done something about coal oil conversion in an orderly way, private enterprise would have gone ahead itself, and it could not have been in the orderly way made possible by the arrangements of my right hon. Friend.
In the United States of America there is not the same relation between Government Departments and industry, but there they have gone in extensively for fuel oil conversion and they are in exactly the same position today as ourselves, that they are short of oil and have to hold up their fuel oil conversion. After all, it is a changing situation and one has to be flexible about these things. Indeed, one would not be an administrator if one were merely to set a hard and fast line and never deviate from it. The circumstances of the case must be taken into consideration at the time and then, with the best advice, what resources there are must be utilised. So it was a little unfair, and not in accordance with the usual line of the hon. Member, to reflect upon the competency of my right hon. Friend, and I think it was just a prelude to a little wordy battle and that he did not really mean it. I am certain that the action of my right hon. Friend was right at the time, and has proved to be right. The changing situation of the world has made a marked difference and, as the hon. Member knows, my right hon. Friend will be making a statement shortly on the problem of fuel oil conversion.
It is perfectly true that the costs of fuel oil have increased and my right hon. Friend replied to a Question on this matter put by the hon. Member for Bury (Mr. W. Fletcher), pointing out that the increase in price was due to the rise in the world price of oil which this Government do not control and that it must be accepted as a normal commercial risk. The hon. Member also referred to Middle East oil and to oil being pumped back. It is the fact that oil has been pumped back at one of the Middle East oilfields, but it was not because of the bad layout of the field or due entirely to the incompleteness of the plant and machinery at the field. It was due, in the main, to the shortage of tankers to lift that oil, and this re-cycling process will be stopped as soon as the tankers are available to lift the extra oil and bring it to the refineries or wherever we want it taken. In any case a certain amount of re-cycling must

inevitably take place. Ships at sea cannot run like railways because of the hazards of weather and problems of loading and unloading. So there are times when tankers tend to get bunched, and if that happens and tankers are not available to take the oil, there must be some recycling. However, I can assure the hon. Member that as soon as tankers are available to lift the oil, it will be dealt with. I give no guarantees, but I do not think the time is far off when from all normal points of view re-cycling should stop, though there always will be re-cycling when there is bunching of tankers.
With regard to the development of the Middle Eastern pipelines, obviously the world shortage of steer has a great effect upon them, for refineries and pipelines are large users of steel and pipeline transportation of oil to the Mediterranean is far more economical than tanker transportation. I cannot express an opinion as to what will happen finally in the Middle East, but it will be readily recognised that there is an economic aspect of this problem. The problem of tankers is one of building, and the hon. Member is entitled to ask what is being done about increasing the tanker fleet. This country lost two million deadweight tons of tanker shipping during the war. Yet by the middle of 1947 these severe losses had been made good and, by the beginning of 1948, our tanker fleet had reached the figure of 5.1 million tons or 600,000 deadweight tons more than in mid-1939. Dry cargo shipping, on the other hand, will not reach its pre-war level before 1951.
Those figures are clear evidence of the very great effort which has been made by the oil and tanker companies to provide sufficient tonnage for their growing requirements. Indeed, it is an accomplishment. Recently oil companies have placed large orders for delivery over the next two or three years. At the end of January, 650,000 dead weight tons of tankers were under construction in yards in the United Kingdom, and of these 260,000 dead weight tons are expected to be completed in 1948. The proportion of tankers in the United Kingdom building programme is steadily increasing, and in January the tankers represented 22 per cent. of the total tonnage under construction compared with 14 per cent. a year ago. This proportion is likely to increase still further.


The planning of the tanker building programme rests initially, not with the Government, but with the oil and tanker companies, which are private enterprise. The Government would be glad to see an increasing flow of orders to meet the demands of the growing trade, although it must be admitted that the scope for more tanker building in the immediate future is limited because the yards are fully booked up, not only for tanker orders, but for other types of merchant ships.
In regard to bunkers, owing to the very great increase in the general demand for oil in 1947, and further prospective increases, the oil companies found they had not enough oil to meet the needs of everyone, and reached the conclusion at the end of 1947 that they could not lay contracts for 1948 with all the customers they had served in the previous year. They have, however, collaborated with His Majesty's Government in ensuring a sufficient supply of bunkers to keep the Merchant Navy in full operation, and, in-so far as the bunker shortage had been due to lack of tankers, the situation has been relieved by a scheme worked out by the shipping industry and the coal industry for taking bunker supplies at places nearest the sources of production.
The hon. Gentleman also dealt with refiner capacity and referred to the Economic Survey which clearly shows the general overall position. That Report says very specifically:
They will however, take some years to mature, and may be delayed in view of the current shortage of steel.

I can assure the hon. Member, and the House, that no one is more anxious than we at the Ministry of Fuel and Power to do everything that can be done to assist the companies with their expansionist schemes, but, in the present difficult circumstances, the allocation of steel to industries which can produce a quick return in foreign exchange cannot be overlooked, in spite of the fact that the allocation of steel for the expansion of British oil companies' projects is probably one of the most productive uses to which steel can be put for the longer term export assets. In any case, the details of companies' schemes are submitted to my right hon. Friend in confidence. I cannot at this Box disclose those details without consultation with the companies concerned. I can assure the hon. Gentleman, and the House, that the schemes of the companies are very imposing, and that my right hon. Friend will do his utmost to forward them.
I hope I have dealt fully with all the points raised by the hon. Gentleman and I hope that, having heard this reply, he will at least be satisfied that my right hon. Friend is doing everything possible to deal with this very difficult problem of oil and that it is not being neglected because of the other work and responsibilities in which my right hon. Friend has also a special interest.

Question put, and agreed to.

Adjourned accordingly at Twenty-six Minutes past Seven o'Clock.